Clean Indoor Air Laws and cigarette demand: Restrictions versus enforcement

Abstract

This paper investigates the impact of Clean Indoor Air Laws on the demand for cigarettes. Utilizing recently published ratings of State Clean Indoor Air Laws, which account for restrictions on the locations of permissible smoking, as well as enforcement and penalties, the results show that demand falls as smoking restrictions are elevated. However, enforcement and penalties have little impact on cigarette demand. Given the social pressures attached to smoking, these results are consistent with Clean Indoor Air Laws being self-enforcing.

Notes

1 Several recent studies (e.g., Chaloupka & Warner, 2000; Gallet & List, 2003) provide useful surveys of the cigarette demand literature.

2 The seven locations are government work sites, private work sites, schools, childcare facilities, restaurants, retail stores, and recreational/cultural facilities.

3 The time frame corresponds to the 1993–1998 period because of the limited availability of data (specifically, limits from Chriqui et al., 2002 and the Tobacco Institute, 1998). Alaska and Hawaii were excluded from the analysis due to the lack of neighbor-state cigarette prices. The data set, therefore, contains 288 observations. Initially, time dummy variables were also included in Eq. (1(1) $Q_{it}={\alpha }_0+{\alpha }_1{P}_{it}+{\alpha }_2\text{N}{\text{P}}_{it}+{\alpha }_3\text{IN}{\text{C}}_{it}+{\alpha }_4\text{AD}{\text{V}}_{it}+{\alpha }_5\text{LA}{\text{W}}_{it}+{ϵ}_{it}\text{,}$(1) ), but their estimated coefficients were all insignificantly different from zero. Hence, they were excluded from the final specification.

4 Estimates of the coefficients of the state dummy variables are excluded from Table 1 to conserve space.

5 The price elasticity of demand (evaluated at the sample means) is approximately −0.43, which is in the neighborhood of the average reported in the literature (see Gallet & List, 2003).