This paper presents an econometric analysis of the effect of policy instruments such as prices, restrictions to use and health warnings on the decisions to start and quit smoking. The duration up to starting and up to quitting is represented with several parametric models for the hazard function, and statistical tests are used to choose the best specification. The estimates reveal that prices have a very weak effect on the duration up to starting. On the contrary, the duration up to quitting is shortened by increases in the prices of the cheapest varieties of cigarettes in the Spanish market. This evidence suggests specific directions for change in the structure of tobacco taxes.
Copyright 2002 John Wiley & Sons, Ltd.