The impact of California anti-smoking legislation on cigarette sales, consumption, and prices

Abstract

<h3>Objective</h3> To integrate and analyse the economic effects of California’s Proposition 99, increasing state excise tax on cigarettes by 25 cents per pack, on the retail price of cigarettes and total state cigarette consumption, among other factors; and to summarise the reduction of smoking resulting from a media advertising campaign financed by Proposition 99. <h3>Design</h3> Econometric models and aggregate data on cigarette prices and consumption were used for the analysis. <h3>Subjects</h3> People of California and the USA; for analysis of pricing behaviour, the major cigarette firms and the retailers of California and the USA. <h3>Results</h3> The higher prices from Proposition 99 reduced cigarette consumption by 8-10 % in the short run and 10-13 % in the long run. The media campaign had a significant effect in further reducing cigarette consumption, though the effects of that campaign are substantially weaker than those of the tax increase. <h3>Conclusion</h3> Proposition 99 has achieved many of its goals.