The Effects of Government Regulation on Teenage Smoking / Eugene M. Lewit, Douglas Coate, Michael Grossman.

By:

Lewit, Eugene M

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w0655.Publication details: Cambridge, Mass. National Bureau of Economic Research 1981.Description: 1 online resource: illustrations (black and white)Subject(s):

H - Public Economics

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Abstract: We examine the impact of three sets of government regulations on the demand for cigarettes by teenagers in the United States. These are: (1) the excise tax on cigarettes, (2) the Fairness Doctrine of the Federal Communications Commission, which resulted in the airing of anti-smoking messages on radio and television from July 1, 1967 to January 1, 1971,and (3) the Public Health Cigarette Smoking Act of 1970, which banned pro-smoking cigarette advertising on radio and television after January 1, 1971.Teenage price elasticities of demand for cigarettes are substantial and much larger than the corresponding adult price elasticities. The teenage smoking participation elasticity equals -1.2, and the quantity smoked elasticity equals -1.4. It follows that, if future reductions in youth smoking are desired, an increase in the Federal excise tax is a potent policy to accomplish this goal. The contention of the proponents of the advertising ban that the Fairness Doctrine failed in the case of teenagers is incorrect. According to our results, the doctrine had a substantial negative impact on teenage smoking participation rates. Extrapolations suggest that the advertising ban was no better or worse a policy than the Fairness Doctrine.

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Previous	nber w0652 The Federal Minimum Wage, Inflation, and Employment /	nber w0653 Indexation of the Minimum Wage with Rational Expectations /	nber w0654 Early Retirement Pension Benefits /	nber w0655 The Effects of Government Regulation on Teenage Smoking /	nber w0656 Minimum Wages and the Demand for Labor /	nber w0657 Housing Behavior and the Experimental Housing Allowance Program: What Have We Learned? /	nber w0658 Real Exchange Rate Adjustment and the Welfare Effects of Oil Price Decontrol /	Next

April 1981.

We examine the impact of three sets of government regulations on the demand for cigarettes by teenagers in the United States. These are: (1) the excise tax on cigarettes, (2) the Fairness Doctrine of the Federal Communications Commission, which resulted in the airing of anti-smoking messages on radio and television from July 1, 1967 to January 1, 1971,and (3) the Public Health Cigarette Smoking Act of 1970, which banned pro-smoking cigarette advertising on radio and television after January 1, 1971.Teenage price elasticities of demand for cigarettes are substantial and much larger than the corresponding adult price elasticities. The teenage smoking participation elasticity equals -1.2, and the quantity smoked elasticity equals -1.4. It follows that, if future reductions in youth smoking are desired, an increase in the Federal excise tax is a potent policy to accomplish this goal. The contention of the proponents of the advertising ban that the Fairness Doctrine failed in the case of teenagers is incorrect. According to our results, the doctrine had a substantial negative impact on teenage smoking participation rates. Extrapolations suggest that the advertising ban was no better or worse a policy than the Fairness Doctrine.