Taxation, regulation, and addiction: a demand function for cigarettes based on time-series evidence

J Health Econ. 1993 Apr;12(1):1-18. doi: 10.1016/0167-6296(93)90037-f.


This work analyzes the effects of prices, taxes, income, and anti-smoking regulations on the consumption of cigarettes in California (a 25-cent-per-pack state tax increase in 1989 enhances the usefulness of this exercise). Analysis is based on monthly time-series data for 1980 through 1990. Results show a price elasticity of demand for cigarettes in the short run of -0.3 to -0.5 at mean data values, and -0.5 to -0.6 in the long run. We find at least some support for two further hypotheses: that antismoking regulations reduce cigarette consumption, and that consumers behave consistently with the model of rational addiction.

Publication types

  • Research Support, Non-U.S. Gov't

MeSH terms

  • California / epidemiology
  • Data Collection
  • Evaluation Studies as Topic
  • Fees and Charges / statistics & numerical data
  • Health Behavior*
  • Humans
  • Income / statistics & numerical data
  • Least-Squares Analysis
  • Models, Psychological
  • Smoking / economics*
  • Smoking / epidemiology
  • Smoking / legislation & jurisprudence
  • Taxes / legislation & jurisprudence*
  • Tobacco Use Disorder / economics*
  • Tobacco Use Disorder / epidemiology