Rational Addiction and Smoking Cessation: Evidence from Vietnam

Tuong-Vy Phan (), Quang-Thanh Tran and Anh Ngoc Nguyen ()
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Tuong-Vy Phan: National Graduate Institute for Policy Studies (GRIPS), Tokyo, Japan
Anh Ngoc Nguyen: Development and Policies Research Center (DEPOCEN), Suite 305 - 307, 12 Trang Thi Street, Hoan Kiem, Hanoi

No 204, Working Papers from Development and Policies Research Center (DEPOCEN), Vietnam

Abstract: In this paper, we apply the rational addiction model to analyze cigarette consumption and quitting behavior in Vietnam, using a unique three-wave longitudinal dataset from the IDRC–CTFK Tobacco Taxation Survey (2018–2020) that links a panel of smokers to a price panel from tobacco retailers. Using OLS and instrumental-variable methods, we find strong evidence of rational addiction among Vietnamese smokers. The estimated dynamics also yield the short-run and long-run effects on cigarette consumption of a permanent price increase, such as one brought about by higher excise taxes. Subgroup estimates suggest greater price sensitivity among younger and more risk-tolerant smokers. Turning to cessation, we find that heavier smokers are less likely to quit, while reported health concerns are the strongest predictor of quitting.

Keywords: rational addiction; cigarette demand; smoking cessation; retail prices; instrumental variables; tobacco taxation; Vietnam (search for similar items in EconPapers)
JEL-codes: C23 C26 D12 D91 I12 I18 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:dpc:wpaper:0204

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