The Effects of Excise Tax on Cigarette Consumption: A Divergence in the Behavior of Youth and Adults

There has been a lot of research done to better understand the effectsof taxation on cigarette consumption. Since cigarettes are addictive, it could be expected that taxation would have little or no effect on the number of cigarette smoked per day or the percentage of smokers within a given population. This paper aims to investigate these effects and, more specifically, differentiate between adult smokers and underage smokers. It will be shown that the percentage of adult smokers does not change with taxation whereas the percentage of underage smokers decreases significantly when excise taxes on cigarettes increase. In addition, it will also be shown that the average number of cigarettes smoked per day decreases as well.