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Taxing Consumption and the Take-up of Public Assistance: The Case of Cigarette Taxes and Food Stamps

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  • Kyle Rozema
  • Nicolas R. Ziebarth

Abstract

We exploit cigarette tax variation across US states from 2001 to 2012 to show how taxing inelastic consumption goods can induce low-income households to enroll in public assistance programs. Using a novel household panel of monthly food stamp enrollment from the Current Population Survey, we enrich standard cigarette tax difference-in-differences models with an additional control group: nonsmoking households. Smoking households are treated with higher taxes, while nonsmoking households are not. Marginal smoking households respond to increases in cigarette taxes by taking up food stamps at rates higher than smoking households in other states and nonsmoking households in the same state.

Suggested Citation

  • Kyle Rozema & Nicolas R. Ziebarth, 2017. "Taxing Consumption and the Take-up of Public Assistance: The Case of Cigarette Taxes and Food Stamps," Journal of Law and Economics, University of Chicago Press, vol. 60(1), pages 1-27.
    • Handle: RePEc:ucp:jlawec:doi:10.1086/692072
    DOI: 10.1086/692072
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    Cited by:

    1. Aslim, Erkmen Giray & Fu, Wei & Tekin, Erdal & You, Shijun, 2023. "From Syringes to Dishes: Improving Food Security through Vaccination," IZA Discussion Papers 16009, Institute of Labor Economics (IZA).
    2. Kurt Lavetti & Thomas DeLeire & Nicolas R. Ziebarth, 2023. "How do low‐income enrollees in the Affordable Care Act marketplaces respond to cost‐sharing?," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 90(1), pages 155-183, March.
    3. Cotti, Chad & Courtemanche, Charles & Maclean, Joanna Catherine & Nesson, Erik & Pesko, Michael F. & Tefft, Nathan W., 2022. "The effects of e-cigarette taxes on e-cigarette prices and tobacco product sales: Evidence from retail panel data," Journal of Health Economics, Elsevier, vol. 86(C).
    4. Liu, Yan, 2023. "Essays on credit rating agencies in China," Other publications TiSEM b54b3315-1185-48b8-aaf8-8, Tilburg University, School of Economics and Management.
    5. Michael Kvasnicka & Thomas Siedler & Nicolas R. Ziebarth, 2018. "The health effects of smoking bans: Evidence from German hospitalization data," Health Economics, John Wiley & Sons, Ltd., vol. 27(11), pages 1738-1753, November.
    6. Stith Sarah S., 2022. "Effects of work requirements for food assistance eligibility on disability claiming," IZA Journal of Labor Economics, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 11(1), pages 1-31, January.
    7. Wenming Xu & Yan Liu, 2021. "Does reputational capital affect credit rating agencies?: empirical evidence from a natural experiment in China," European Journal of Law and Economics, Springer, vol. 51(3), pages 433-468, June.
    8. Kenchington, David G. & Shohfi, Thomas D. & Smith, Jared D. & White, Roger M., 2022. "Do sin tax hikes spur cheating in interpersonal exchange?," Accounting, Organizations and Society, Elsevier, vol. 96(C).

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