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Consumer Response To Increases In The State Cigarette Tax, Patrick Nolan
Consumer Response To Increases In The State Cigarette Tax, Patrick Nolan
MPA/MPP/MPFM Capstone Projects
In this paper I look at consumer responsiveness to the cigarette tax. Cigarette taxes are motivated by wanting to raise money for the state and wanting to deter smoking in the state’s population. Obviously reducing smoking in the population would reduce the externalities caused by smoking. We know the health effects are completely detrimental to the consumer, and detrimental to those around them. In addition to this we know that tobacco is an addictive substance, meaning than is inherently extremely inelastic.
To find on how consumers respond to tax increases I conducted a difference in difference analysis of tax revenue …