By Aidan Lester
Everyone has known that cigarettes are bad for you for decades. How has the government stopped this negative externality?
Cigarettes are the leading cause of lung cancer in the United States (CDC). Cigarettes kill by becoming a daily part of the consumers life through addiction. Even though this is common knowledge in the 21st Century, many Americans are still smokers. The big question I had was: how much can the government tax cigarettes before addicts stop purchasing them? The answer was not that much. In the early 80’s, inflation caused cigarette sales to decrease by 8% which conveyed that smokers were willing to beat their addiction rather than pay more. Later, in 1989, California proposed an act that would add 25 cents to each pack sold. Companies like Marlboro fought back because they knew that this would decrease
their company’s revenue significantly as smokers weren’t willing to pay more. The price elasticity of cigarettes varies across different age groups. Younger people have a less elastic demand than older groups. This is because younger people have less of a disposable income compared to older people. Another study indicates that a change in price will help stop smoking in California specifically. This is also the same with e-cigarettes/vapes, they also are elastic in their demand. In conclusion, addiction does not play a big role in the price elasticity of tobacco and nicotine products.