Cigarette Taxes and the Household Budget / Michael E. Darden, Reginald B. Hebert, Michael F. Pesko, Samuel Sturm.

Format:

Book

Author/Creator:

Darden, Michael E.

Contributor:

Hebert, Reginald B.

Pesko, Michael F.

Sturm, Samuel.

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w33746.

NBER working paper series no. w33746

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2025.

Summary:

We study the effects of cigarette excise taxes on smokers' household budgets. In a randomized survey experiment, smokers respond to hypothetical tax increases by adjusting cigarette shopping behaviors, substituting toward other tobacco products, and reducing both discretionary and human capital-related expenditures. Using Consumer Expenditure Survey data and a quasi-experimental design, we find cigarette taxes reduce smoking prevalence but increase cigarette expenditures among continuing smokers. A $1 increase in cigarette taxes causes a modest reduction in human capital-related expenditures among below-median-income smokers ($48 less per quarter). Our work uncovers important unintended consequences of cigarette taxes, particularly for low-income individuals.

Notes:

May 2025.

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