IDEAS home Printed from https://ideas.repec.org/a/ntj/journl/v54y2001i1p83-102.html
   My bibliography  Save this article

State Tobacco Taxation, Education and Smoking: Controlling for the Effects of Omitted Variables

Author

Listed:
  • Keeler, Theodore E.
  • Hu, Teh-wei
  • Manning, Willard G.
  • Sung, Hai-Yen

Abstract

There is a potential bias in cross-sectional estimates of the effects of cigarette prices on cigarette consumption. States with the strongest antismoking sentiment will likely have the highest cigarette taxes, which result in the highest prices. Some of the lower consumption of cigarettes in high-tax states will result from such sentiments, rather than from higher taxes, so the estimated effect of cigarette taxes on consumption will be overstated. This study corrects for such bias, employing panel data for U.S. states from 1960 to 1990. We find that controlling for this bias reduces the estimated consumer response to cigarette price change by 40-50 percent.

Suggested Citation

  • Keeler, Theodore E. & Hu, Teh-wei & Manning, Willard G. & Sung, Hai-Yen, 2001. "State Tobacco Taxation, Education and Smoking: Controlling for the Effects of Omitted Variables," National Tax Journal, National Tax Association;National Tax Journal, vol. 54(1), pages 83-102, March.
    • Handle: RePEc:ntj:journl:v:54:y:2001:i:1:p:83-102
    DOI: 10.17310/ntj.2001.1.04
    as

    Download full text from publisher

    File URL: https://doi.org/10.17310/ntj.2001.1.04
    Download Restriction: Access is restricted to subscribers and members of the National Tax Association.
    File URL: https://doi.org/10.17310/ntj.2001.1.04
    Download Restriction: Access is restricted to subscribers and members of the National Tax Association.
    File URL: https://libkey.io/10.17310/ntj.2001.1.04?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. repec:fth:prinin:304 is not listed on IDEAS
    2. Lewit, Eugene M. & Coate, Douglas, 1982. "The potential for using excise taxes to reduce smoking," Journal of Health Economics, Elsevier, vol. 1(2), pages 121-145, August.
    3. Ashenfelter, Orley & Krueger, Alan B, 1994. "Estimates of the Economic Returns to Schooling from a New Sample of Twins," American Economic Review, American Economic Association, vol. 84(5), pages 1157-1173, December.
    4. Orley Ashenfelter & Alan Krueger, 1992. "Estimates of the Economic Return to Schooling from a New Sample of Twins," Working Papers 683, Princeton University, Department of Economics, Industrial Relations Section..
    5. Fuchs, Victor R. (ed.), 1982. "Economic Aspects of Health," National Bureau of Economic Research Books, University of Chicago Press, number 9780226267852, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lovenheim, Michael F., 2008. "How Far to the Border?: The Extent and Impact of Cross-Border Casual Cigarette Smuggling," National Tax Journal, National Tax Association;National Tax Journal, vol. 61(1), pages 7-33, March.
    2. Mark Stehr, 2007. "The effect of cigarette taxes on smoking among men and women," Health Economics, John Wiley & Sons, Ltd., vol. 16(12), pages 1333-1343.
    3. Chin W. Yang & Hui Wen Cheng & Ching Wen Chi & Bwo-Nung Huang, 2016. "A Tax Can Increase Profit of a Monopolist or a Monopoly-like Firm: A Fiction or Distinct Possibility?," Hacienda Pública Española / Review of Public Economics, IEF, vol. 216(1), pages 39-60, March.
    4. DeCicca, Philip & Kenkel, Donald & Liu, Feng, 2013. "Excise tax avoidance: The case of state cigarette taxes," Journal of Health Economics, Elsevier, vol. 32(6), pages 1130-1141.
    5. Abdulbaki Bilgic & Wojciech Florkowski & Cuma Akbay, 2010. "Demand for cigarettes in Turkey: an application of count data models," Empirical Economics, Springer, vol. 39(3), pages 733-765, December.
    6. Cheng Kai-Wen & Kenkel Don S, 2010. "U.S. Cigarette Demand: 1944-2004," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-21, August.
    7. Gary A. Hoover, 2003. "The Impact of Nonrevenue Maximizing Factors on State‐Level Cigarette Tax Rates," Contemporary Economic Policy, Western Economic Association International, vol. 21(3), pages 349-357, July.
    8. Mark N. Harris & Ranjodh B. Singh & Preety Srivastava, 2024. "Cannabis and tobacco: substitutes and complements," Journal of Population Economics, Springer;European Society for Population Economics, vol. 37(4), pages 1-29, December.
    9. Austan Goolsbee & Michael F. Lovenheim & Joel Slemrod, 2010. "Playing with Fire: Cigarettes, Taxes, and Competition from the Internet," American Economic Journal: Economic Policy, American Economic Association, vol. 2(1), pages 131-154, February.
    10. Escario, Jose Julian & Molina, Jose Alberto, 2004. "Modeling the optimal fiscal policy on tobacco consumption," Journal of Policy Modeling, Elsevier, vol. 26(1), pages 81-93, January.
    11. C. W. Yang & C. B. Hawley & B. N. Huang & M. J. Hwang, 2011. "A Monopolist Can Never Price in the Inelastic Range of a Demand Curve or Can It?1," The American Economist, Sage Publications, vol. 56(2), pages 108-117, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Keeler, Theodore E. & Hu, Teh-wei & Manning, Willard G. & Sung, Hai-Yen, 2001. "State Tobacco Taxation, Education and Smoking: Controlling for the Effects of Omitted Variables," National Tax Journal, National Tax Association, vol. 54(n. 1), pages 83-102, March.
    2. Keeler, Theodore E., 1993. "Highway Safety, Economic Behavior, and Driving Environment," University of California Transportation Center, Working Papers qt9c27z2z1, University of California Transportation Center.
    3. Schuh, G. Edward, 1993. "The Future Of Land Grant Universities," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 25(1), pages 1-10, July.
    4. Lang, Kevin, 1993. "Ability Bias, Discount Rate Bias and the Return to Education," MPRA Paper 24651, University Library of Munich, Germany.
    5. Michael A. Boozer & Alan B. Kreuger & Shari Wolkon, 1992. "Race and School Quality Since Brown v. Board of Education," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1992 Micr), pages 269-338.
    6. David Card, 1993. "Using Geographic Variation in College Proximity to Estimate the Return to Schooling," Working Papers 696, Princeton University, Department of Economics, Industrial Relations Section..
    7. Thomas J. Kane & Cecilia E. Rouse, 1993. "Labor Market Returns to Two- and Four-Year Colleges: Is a Credit a Credit and Do Degrees Matter?," NBER Working Papers 4268, National Bureau of Economic Research, Inc.
    8. Gundlach, Erich, 1993. "Determinanten des Wirtschaftswachstums: Hypothesen und empirische Evidenz," Open Access Publications from Kiel Institute for the World Economy 1583, Kiel Institute for the World Economy (IfW Kiel).
    9. Matt Dickson, 2013. "The Causal Effect of Education on Wages Revisited," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(4), pages 477-498, August.
    10. Orley Ashenfelter & David J. Zimmerman, 1997. "Estimates Of The Returns To Schooling From Sibling Data: Fathers, Sons, And Brothers," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 1-9, February.
    11. Peter A. Savelyev, 2014. "Psychological Skills, Education, and Longevity of High-Ability Individuals," Vanderbilt University Department of Economics Working Papers 14-00007, Vanderbilt University Department of Economics.
    12. Joshua D. Angrist & Alan B. Krueger, 1991. "Estimating the Payoff to Schooling Using the Vietnam-era Draft Lottery," Working Papers 670, Princeton University, Department of Economics, Industrial Relations Section..
    13. Lång, Elisabeth & Nystedt, Paul, 2016. "Learning For Life? The Effects of Schooling on Earnings and Health- Related Behavior Over the Life Cycle," LiU Working Papers in Economics 4, Linköping University, Division of Economics, Department of Management and Engineering.
    14. Xue, Sen & Kidd, Michael P. & Le, Anh T. & Kirk, Kathy & Martin, Nicholas G., 2019. "The Role of Locus of Control in Education, Occupation, Income and Healthy Habits: Evidence from Australian Twins," GLO Discussion Paper Series 371, Global Labor Organization (GLO).
    15. Asya Bellia & Lorenzo Corsini, 2021. "Disability and happiness: the role of accessibility," Discussion Papers 2021/284, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    16. Hope Corman & Theodore J. Joyce & Michael Grossman, 1985. "Birth Outcome Production Functions in the U.S," NBER Working Papers 1729, National Bureau of Economic Research, Inc.
    17. Wim Groot & Henriëtte Maasen Van Den Brink, 1997. "Allocation and the Returns to Over-education in the UK," Education Economics, Taylor & Francis Journals, vol. 5(2), pages 169-183.
    18. Andrew Halpern-Manners & Jonas Helgertz & John Robert Warren & Evan Roberts, 2020. "The Effects of Education on Mortality: Evidence From Linked U.S. Census and Administrative Mortality Data," Demography, Springer;Population Association of America (PAA), vol. 57(4), pages 1513-1541, August.
    19. Theodore Joyce, 1987. "The impact of induced abortion on black and white birth outcomes in the United States," Demography, Springer;Population Association of America (PAA), vol. 24(2), pages 229-244, May.
    20. Lawrence F. Katz, 1992. "Commentary : human capital and economic growth," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 217-224.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ntj:journl:v:54:y:2001:i:1:p:83-102. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: The University of Chicago Press (email available below). General contact details of provider: https://www.ntanet.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.