Smoking restrictions and spillovers across jurisdictions

Abstract

We use state-level data to estimate the demand for cigarettes and the determinants of smoking prevalence in the United States. The main contribution lies in considering spillovers from geographic smoking restrictions. Results show that price affects cigarette demand, but not smoking prevalence. Cigarette demand turns out be unit elastic and similar in magnitude to the border-price elasticity. Home-based smoking restrictions lower both cigarette demand and participation, while work restrictions only lower participation. Border home restrictions seem inconsequential, whereas border work restrictions have a marginally positive effect, especially on cigarette demand. Policy implications are discussed.

Notes

¹ For instance, in the case of Florida the neighboring states would be Alabama and Georgia.

² Given appropriate data, one could qualitatively distinguish among the various geographic smoking restrictions.

³ Alaska and Hawaii drop out of the data set because they have no immediate US neighbouring states.

⁴ Details are available upon request. See Ramsey and Schmidt (1976) for theoretical background on the RESET test.

⁵ There is some evidence in the literature regarding the effectiveness of workplace smoking restrictions, both in the United States and in other nations (see Bardsley and Olekalns (1999) and Fichtenberg and Glantz (2002); Goel and Nelson (2006) for a review).

⁶ The annual average cigarette sales were 79.2 packs per capita.

⁷ Alternately, some habitual smokers might choose to work outdoors or might prefer telecommuting.