We evaluate the effect of smoking bans and excise taxes on the exposure to tobacco smoke of nonsmokers, and we show their unintended consequences on children. Smoking bans perversely increase nonsmokers' exposure by displacing smokers to private places where they contaminate nonsmokers. We exploit data on bio-samples of cotinine, time use, and smoking cessation, as well as state and time variation in anti-smoking policies across US states. We find that higher taxes are an efficient way to decrease exposure to tobacco smoke.
Wednesday, December 23, 2009
The answer is yes according to this article in the AEA Applied Economics by Adda and Cornaglia. It's a perfect example of the unintended consequences of heavy-handed government regulations and of the principle that incentives matter. Here's the abstract: