Cigarette Taxes and Unintended Consequences

One of the best questions you can ask a social scientist is, “and then what?” Thinking about second-order effects is essential to smart research and policy-making. Research on the unintended consequences of cigarette taxes helps to illustrate this point:

Besides resulting in a shift in purchasing choices, cigarette sin taxes also indirectly result in illegal activities like smuggling. Each of the fifty U.S. states taxes cigarettes at different levels, and this uneven price distribution opens up market avenues for nefarious wrongdoers. Cigarette trafficking does not appear to be extremely prevalent within the U.S., but it’s estimated to be a $1.5 billion industry in Canada. Traffickers commonly smuggle cheap cigarettes purchased in the United States across the border. It’s one of the few illegal drug trades where the U.S. is an exporter, not an importer.

Interestingly as well, a recent study just published in the journal Substance Abuse Treatment, Prevention, and Policy reported that boosts in state cigarette prices were associated with increases in binge drinking among persons aged 21-29, specifically a 4.06% increase for every dollar increase in cigarette price. Drinking also rose among those aged 65 and older.

Not all of the effects are negative, however. Recently I was talking to a colleague who will take up a position at University College London at the end of the year. I asked whether the poor reputation of British food was deserved, and he replied that it has improved substantially in recent years. Since smoking was banned in pubs, he explained, they had to improve the cuisine to keep customers there longer. How’s that for an unintended consequence?
Update: Going through my RSS feed, I see that Adam Ozimek wrote a related post on Bloomberg’s soda ban a few days back.

3 thoughts on “Cigarette Taxes and Unintended Consequences

  1. Pingback: More Unintended Consequences of Cigarette Taxes | You Study Politics, Right?

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