An economic model of youth smoking: Tax and welfare effects
Publication Source
Suranovic, S.M.
2005
Publication Title
The George Washington University
Publication Type
Working paper
Abstract
This paper develops a model of smoking choice in which rationality is bounded by limitations in intertemporal computational abilities. The model is applied to the youth decision to initiate smoking. Lifetime smoking paths of representative smokers are shown to demonstrate why youth smokers may experience a reduction in lifetime utility and come to regret their decision to smoke. It is suggested that public policy interventions that can raise
the near term cost of smoking will be more effective than informational campaigns that emphasize future health costs. However, youth taxes may need to be quite high to substantially reduce smoking rates among youths that have already begun to smoke. Also, youth taxes may not prevent future smoking as an adult, although it is likely to reduce smoking rates and lead to earlier quitting.
