Mizzou Economics Professor Michael Pesko is featured in CATO Research newest issue of Research Briefs in Economic Policy — “Cigarette Taxes and the Household Budget,” by Michael E. Darden, Carey Business School, Johns Hopkins University; Reginald B. Hebert, Yale School of Public Health; Michael F. Pesko, University of Missouri and IZA—Institute of Labor Economics; and Samuel Sturm, Bloomberg School of Public Health, Johns Hopkins University. 

Cigarette smoking remains the greatest cause of preventable mortality in the United States, and cigarette excise taxes are commonly used to deter tobacco use. Despite much existing research on the effects of cigarette taxes on smoking prevalence, very little is known about how smokers reallocate their household budgets when cigarette taxes increase. We conducted a survey of cigarette smokers about their expectations regarding their future spending after a hypothetical cigarette tax increase. Our findings reveal that the tax increase caused all respondents to expect large reductions in spending on clothing, health care, and housing. Additionally, our findings provide clear evidence of greater spending reallocations among smokers of lower socioeconomic status.

 Learn more by reading the brief here.