FINDINGS OF THE STUDY:
The results of this analysis indicate that higher cigarette prices would result in substantial reductions in both smoking participation and average cigarette consumption among high school students. For example, if state average prices would rise by $0.50 (i.e. 26.5%), the youth cigarette demand can decline by 17.5 percent: participation would drop from 27.8 to 24.8 percent and the average monthly consumption would decrease from 139 to 130 cigarettes. However, the choice of price variable in an equation affects the predicted reaction among high school smokers. Given the price measures advantages, disadvantages and their subsequent performance in the cigarette demand function, the most appropriate prices for the data at hand are State Average Price and both Average Perceived Prices.
Focusing on these three price measures, the total estimated price elasticity of cigarette demand fell in a range of -0.66 to -1.63. The estimates support the hypothesis that youth is more price responsiveness than are adults in their demand for cigarettes (adults' price elasticity is believe to be between -0.3 to -0.5 according to several recent economic studies). The study found that high school students are more responsive to the price of cigarettes as they perceive it compared to average state price or to state excise tax. If the perceived prices more accurately reflect the prices youth is paying for their cigarettes, the price elasticity of this consumer group is even higher than estimated by studies using state average price. This finding is a unique contribution of this study to the economic literature on smoking. The effect of public policies on youth smoking was measured by high school students' reaction to Clean Indoor Air laws and to Youth Access laws. The laws restricting smoking in various places (CIA laws) have a negative effect on both smoking probability and smoking intensity among the studied group. The effect is not statistically significant at...
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