The demand for cigarettes in california and behavioural risk factors

Abstract

This study contributes to the understanding of the demand for cigarettes by taking into account the interdependence of smoking and other behavioural risk factors. Information on smoking and other behavioural risk factors including drinking, alcohol use, and obesity were obtained from the California Behavioural Risk Factor Survey for the period 1985-91. A monthly cigarette price index for California was constructed based on data obtained from the Bureau of Labor Statistics. A two-part model was used to examine separately the effect of price on the decision to be a smoker, and on the amount of cigarettes smoked by smokers. The overall price elasticity of cigarettes was estimated at -0.46, with a price elasticity of -0.33 for smoking participation and of -0.22 for the amount of cigarettes consumed by smokers. The inclusion of other behavioural risk factors reduced the estimated price elasticity for smoking participation substantially, but had no effect on the conditional price elasticity for the quantity of cigarettes smoked.