How do smoking bans in restaurants affect restaurant and at-home alcohol consumption?

Abstract

In this paper, we analyze the impact of smoking bans on restaurant and at-home alcohol consumptions in a rational addiction model using a pseudo-panel data approach. Cigarette consumption, restaurant alcohol consumption and at-home alcohol consumption fit well with the rational addiction model. Our results suggest that cigarettes and alcohol reinforce each other in consumption, but consumers increase restaurant alcohol consumption when cigarette prices increase. We find that smoking bans increase restaurant alcohol consumption, but decrease at-home alcohol consumption. After a smoking ban is imposed, nonsmokers are likely to stay longer at restaurants and consume more alcohol. On the other hand, when smokers are not allowed to smoke in restaurants, they are likely to compensate for it by increasing restaurant alcohol consumption. As smoking bans increase social drinking habits, a decrease in at-home alcohol consumption is observed. Our results suggest that smoking bans in restaurants or bars must be accompanied by decreased blood alcohol concentration limits and increased road controls so that negative externalities such as fatalities due to drunk driving can be avoided.