Why a cigarette tax is good public policy: the evidence

The American Economic Journal: Applied Economics just published this article finding that a $1 cigarette tax reduces childho0d sick days at school by 10%. This demonstrates a strong link between second-hand smoke and public health, and how responsive cigarette demand is to a tobacco tax.

(6) Does Early Life Exposure to Cigarette Smoke Permanently Harm Childhood Welfare? Evidence from Cigarette Tax Hikes
David Simon
Evidence suggests that excise taxes on tobacco improve fetal health. However, it remains unknown if smoke exposure in early life causes lasting harm to children. I find that in utero exposure to a dollar increase in the state cigarette tax causes a 10 percent decrease in sick days from school and a 4.7 percent decrease in having two or more doctor visits. I present additional evidence for decreases in hospitalizations and asthma. This supports the hypothesis that exposure to cigarette smoke in utero and infancy carries significant medium-term costs, and that excise taxes can lead to lasting intergenerational improvements in well-being.
Full-Text Access | Supplementary Materials

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