Are there interregional differences in the response of cigarette smoking to state cigarette excise taxes in the USA? Exploratory analysis

Abstract

Within the context of the period fixed-effects model, this study uses a 2002–2009 state-level panel data set of the USA to investigate the relative impact of state cigarette excise taxation across the nation in reducing cigarette smoking. In particular, by focusing upon the state cigarette excise taxation levels within each of the nine US Census Divisions, this study investigates whether there are inter-regional differences in the rate of responsiveness of cigarette consumption to increased state cigarette taxes. The initial empirical estimates reveal that although the per capita number of packs of cigarettes smoked annually is a decreasing function of the state cigarette excise tax in all nine Census Regions, the relative response of cigarette smoking to state cigarette tax increases varies considerably from one region to the next. Reinforcing this conclusion, in one specification of the model, the number of packs of cigarettes smoked in response to a higher state cigarette tax is statistically significant and negative in only eight of the nine Census Divisions. Furthermore, when cigarette smoking is measured in terms of the percentage of the population classified as smokers, interregional differentials in the response of smokers to higher state cigarette taxes are much greater. Thus, there is evidence that cigarette excise taxation exercises rather different impacts on the propensity to smoke across Census Regions.

Keywords:

• packs of cigarettes smoked
• percent of population classified as smokers
• cigarette excise taxes
• US Census Divisions
• interregional responses differentials to tax increases

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. Increased smoking intensity essentially is increased nicotine consumption from each cigarette smoked [1,21] and can be accomplished by smoking fewer cigarettes higher in nicotine and/or smoking cigarettes all the way down to the very end.

2. The correlation matrix will be provided upon request.

3. The federal cigarette excise tax did not change over the study period [5].

4. Interestingly, the reader should be made aware that the explanation does not appear to lie with the initial differential levels of the state cigarette tax within the various Census Divisions. Indeed, it is noteworthy that the estimated coefficients for the effect of state cigarette taxation on the number of packs smoked per capita in the nine Census Divisions are effectively uncorrelated with the level of the state excise tax per pack according to Census Division.

5. Such a contrast also applies to the estimation of Equation (2).

6. These estimation results will be provided upon request.