Behavioral Responses to Taxation: Cigarette Taxes and Food Stamp Take-Up

Kyle Rozema and Nicolas Ziebarth ()

No 150015, Working Papers from Canadian Centre for Health Economics

Abstract: This paper investigates a previously unexplored behavioral response to taxation: whether smokers compensate for higher cigarette taxes by enrolling in food stamps. First, we show theoretically that increases in cigarette taxes can induce food stamp take-up of non-enrolled, eligible smoking households. Then, we study the theoretical predictions empirically by exploiting between and within-household variation in food stamp enrollment from the Current Population Survey, as well as data from the Consumer Expenditure Survey. The empirical evidence strongly supports the model predictions. Higher cigarette taxes increase the probability that low-income smoking households take-up food stamps.

Keywords: cigarette taxes; food stamp take-up; tax pass-through rate; unintended consequences (search for similar items in EconPapers)
JEL-codes: H21 H23 H26 H71 I18 L66 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2015-10
New Economics Papers: this item is included in nep-pbe and nep-pub
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Published Online, October 2015

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http://www.canadiancentreforhealtheconomics.ca/wp- ... Rozema-Ziebarth1.pdf First version, 2015 (application/pdf)

Related works:
Working Paper: Behavioral Responses to Taxation: Cigarette Taxes and Food Stamp Take-Up (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:cch:wpaper:150015

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