We examine the potential for reducing cigarette, smoking through increases in cigarette excise taxes by estimating the price elasticity of demand for cigarettes. Using information on individual smoking behavior for a sample of adults in the 1976 Health Interview Survey, we estimate the adult price elasticity of demand for cigarettes to be -.45. Moreover, we find that price has its greatest effect on the smoking behavior of young males and that it operates primarily on the decision to begin smoking regularly rather than via adjustments in the quantity of cigarettes smoked by smokers. It follows that, if future reductions in cigarette smoking are desired, Federal excise tax policy can be a potent tool to accomplish this goal, but only in the long run. An exèise tax increase, if'maintatned tn rea' terms, woUld discourage smoking participation by successive cohorts of young adults and those reduced smoking levels would be reflected in aggregate smoking as these cohorts mature. In the short run however, the impact of an excise tax increase on aggregate cigarette consumption would be relatively small.

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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

Based on an analysis of the second National Health and Nutrition Examination Survey, conducted between 1976 and 1980, we find that the frequency of the consumption of beer, the most popular alcoholic beverage among youths, is inversely related to the real price of beer and to the minimum legal age for its purchase and consumption. The negative price and legal drinking age effects are by no means limited to reductions In the fraction of youths who consume beer infrequently (less than once a week). Instead, the fractions of youths who consume beer fairly frequently (1-3 times a week) and frequently (4-7 times a week) fall more in absolute or percentage terms than the fraction of infrequent drinkers when price or the drinking age rises. These are striking findings because frequent and fairly frequent drinkers are likely to be responsible for a large percentage of youth motor vehicle accidents and deaths. Simulations suggest that, if reductions In youth alcohol use and abuse are desired, both a uniform drinking age of 21 and an increase in the Federal excise tax rate on beer are effective policies to accomplish this goal. They also suggest that the tax policy may be more potent than the drinking age policy.

We examine the potential for reducing cigarette smoking through increases in cigarette excise taxes by estimating the price elasticity of demand for cigarettes. Using information on individual smoking behavior from the 1976 Health Interview Survey, we estimate the adult price elasticity of demand for cigarettes to be -0.42. We find that price has its greatest effect on the smoking behavior of young males and that it operates primarily on the decision to smoke rather than via adjustments in the quantity of cigarettes smoked. An excise tax increase would discourage smoking by successive cohorts of young adults, and those reduced smoking levels would be reflected in aggregate smoking as these cohorts mature.