Cigarettes are in the news again. A Federal judge just imposed strict new limits on tobacco advertising - no more "low tar" cigarettes - and Michael Bloomberg announced that he has set up a new foundation dedicated to starting a global anti-smoking campaign.
Personally, I think the solution is simple: raise the cigarette tax. If you want to decrease the numbers of smokers, that's the only proven solution. The distant threat of lung cancer can't compete with the Marlborough man. A hefty surcharge, however, can. In fact, a 10 percent increase in the price of cigarettes causes a 4 percent reduction in demand. Teenagers are especially sensitive to these price changes: a 10 percent increase in price causes a 12 percent drop in teenage smoking. (The only bad news is that raising the price of cigarettes tends to increase the demand for marijuana. Apparently, the two products are in competition. I wonder what Altria thinks of that.)
Comments
Just out of curiosity what reference did you get the information about pot and cigarette correlations?
Posted by: Kelli | August 18, 2006 3:47 PM
See Gregory Mankiw's textbook, "The Principle of Microeconomics," p. 70-71.
Posted by: Jonah | August 18, 2006 4:00 PM