The Influence of Geography and Measurement in Estimating Cigarette Price Responsiveness

We use data from the Tobacco Use Supplements to the Current Population Survey from 2006-2015 to calculate cigarette price elasticities of demand using four alternative cigarette tax/price measures that compensate for the local tax environment to various extents. We use both state-level prices and local-level prices from 386 sub-state areas of the United States. We estimate a price elasticity of total demand of -0.38 using the price measure most strongly compensating for the local tax environment, and significantly lower elasticities for other popular cigarette price measures. We also find greater price responsiveness for adults that are younger, higher income, and higher educated.