PRICE ELASTICITY OF DEMAND FOR CIGARETTES IN UNITED STATES

The retail price elasticity of demand for cigarettes is a particularly important parameter for social decisions at this time. Results from prior cigarette elasticity studies vary widely, ranging from 0.10 to 1.48. Temporal changes may explain some of this variation, but differences in research methods are more important. The quasi-experimental approach used in this article yields an elasticity estimate (0.511) free of many of the extraneous and irrelevant systematic influences that afflict time-series and cross-section methods. In addition, the length of run of the elasticity is known and explicit. The method provides built-in protections against bias from trends in collinear variables and produces sensible estimates with reasonably small and measurable dispersion. © 1968, Oxford University Press.