The Health Care Consequences of Smoking and ...

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Downloadable (with restrictions)! The literature on the health economics of smoking presents two principal facts: that smoking increases health care costs, and that restrictions on smoking lead to reductions in smoking prevalence and intensity. Some researchers have hypothesized that these two facts, in combination, allow the inference that restricting smoking will lower health care costs. For a variety of reasons, however, observed associations between smoking and health care use on the one hand, and regulations and smoking on the other, do not imply a casual effect of the restrictions on health care. This paper extends the literature by examining whether cigarette tax increases lead to lower health care costs. Using data from the 1991 and 1993 National Heath Interview Surveys, it first reproduces the principal results in the literature on smoking, taxes, and health care utilization, and then estimates the effects of tobacco taxes on health care. The results indicate that once one controls for endogenous qui

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