NBER Study: Cigarette Prices And Teenage Smoking
October 25, 2000
Smoking among America's youth rose steadily starting in 1992, after declining for the previous 15 years. This trend is particularly interesting since adult smoking rates have been declining steadily. A recent study credits this climb in teenage smoking to the relative decline of cigarette prices.
The study finds that
- Background characteristics such as income and location explain less than 10 percent of the rise in teenage smoking.
- For every 10 percent decline in the price, teenage smoking rises by about 7 percent, a much stronger price sensitivity than adult smokers.
- A price decline in the early 1990s due to a price war among tobacco companies accounts for about a quarter of new young smokers, while the rise in cigarette prices in 1998 partially explains the decrease in teen smoking that year.
The study notes that younger teens seem to be an exception. They do not appear to be affected by price. The study also finds that teens underestimate the difficulty of trying to quit smoking.
- Of those high school seniors who smoke, 56 percent say they will not be smoking in 5 years.
- However, only 31 percent of them actually quit in 5 years.
- Between 25 and 50 percent of the rise in teenage smoking will persist in the 1990s will persist into adulthood.
- The adult smoking rate will rise by 8 to 16 percent, or 477,000 to 950,000 extra adult smokers.
The overall cost of this rise in teenage smoking is estimated to be $36 billion to $73 billion dollars. To curb teenage smoking, the study finds that raising the excise tax is the clearest and most effective tool. Restricting smoking areas does not seem to have an effect.
Source: David R. Francis, "Dramatic Rise in Teenage Smoking," NBER Digest, October 2000. Based on Jonathan Gruber and Jonathan Zinman, "Youth Smoking in the U.S.: Evidence and Implications," NBER Working Paper No. w7780, July 2000, National Bureau of Economic Research, 1050 Massachusetts Avenue, Cambridge, Mass. 02138, (617) 868-3900.
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