An Application of Unconditional Quantile Regression to Cigarette Taxes

This study investigates heterogeneous response to state cigarette tax increases using unconditional quantile regression (UQR). We make two contributions to the empirical policy analysis literature. First, we argue that UQR provides more policy-relevant information than conventional quantile regressi...

Full description

Saved in:
Bibliographic Details
Published in:Journal of policy analysis and management 2014, Vol.33 (1), p.188-210
Main Authors: Maclean, Johanna Catherine, Webber, Douglas A., Marti, Joachim
Format: Article
Language:English
Subjects:
Adults
Cigarette smoking
Cigarettes
Estimated taxes
Excise taxes
Fiscal policy
Health care economics
Income taxes
Least Squares Statistics
Policy Analysis
Population
Public policy
Quantile regression
Regression analysis
Smoking
Smoking cessation
State government
State income tax
State Policy
Studies
Surveys
Tax increases
Taxation
Taxes
Tobacco
Tobacco taxes
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:This study investigates heterogeneous response to state cigarette tax increases using unconditional quantile regression (UQR). We make two contributions to the empirical policy analysis literature. First, we argue that UQR provides more policy-relevant information than conventional quantile regression in most empirical state policy analyses. Second, we document cigarette tax elasticity across a sample of adult smokers in the Current Population Survey Tobacco Use Supplements between 1992 and 2011. Our ordinary least squares regression show an imprecise negative relationship between taxes and cigarettes smoked in the past 30 days, while UQR reveals a U-shaped relationship: Only moderate smokers reduce their smoking following a cigarette tax increase, and the magnitude of the effect is small. A $1.00 (135 percent) increase in the cigarette tax leads to a 3.5 percent reduction in the number of cigarettes smoked in the past 30 days among the most responsive smokers (implied tax elasticity = -0.03). © 2013 by the Association for Public Policy Analysis and Management.
ISSN:0276-8739
1520-6688
DOI:10.1002/pam.21724