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Abstract

A framework was developed in order to specify a model for annual U.S. per capita consumption of cigarettes. Three separate time related variables were utilized to measure the effects of health related information regarding smoking. The empirical results from the post World War II data set reveal that while prices and income are important determinants of cigarette consumption, the estimates for both were in the inelastic range. The age distribution of the adult population is also an important variable. While the development of the filter tip has been successful in stimulating smoking, the low tar and nicotine innovation has not had a statistically significant effect. Health information has repeatedly produced substantial short and long run effects. Current consumption is falling at an annual rate of between 3 to 4 percent.

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