scholarly journals Smoke Gets in Your Eyes: Cigarette Tax Salience and Regressivity

2013 ◽  
Vol 5 (1) ◽  
pp. 302-336 ◽  
Author(s):  
Jacob Goldin ◽  
Tatiana Homonoff
Keyword(s):  
Low Income ◽  
Time Variation ◽  
Sales Tax ◽  
Tax Rates ◽  
Income Differences ◽  
Cigarette Taxes ◽  
Commodity Taxes ◽  
Cigarette Tax ◽  
Low Income Consumers ◽  
Posted Price

Recent evidence suggests consumers pay less attention to commodity taxes levied at the register than to taxes included in a good's posted price. If this attention gap is larger for high-income consumers than for low-income consumers, policymakers can manipulate a tax's regressivity by altering the fraction of the tax imposed at the register. We investigate income differences in attentiveness to cigarette taxes, exploiting state and time variation in cigarette excise and sales tax rates. Whereas all consumers respond to taxes that appear in cigarettes' posted price, our results suggest that only low-income consumers respond to taxes levied at the register. (JEL D12, H22, H25, H71, L66)

scholarly journals Estimating the long-run relationship between state cigarette taxes and county life expectancy

2019 ◽  
Vol 29 (1) ◽  
pp. 81-88 ◽  
Author(s):  
Aaron Baum ◽  
Sandra Aguilar-Gomez ◽  
James Lightwood ◽  
Emilie Bruzelius ◽  
Stanton A Glantz ◽  
...  
Keyword(s):  
Life Expectancy ◽  
Low Income ◽  
Smoking Prevalence ◽  
Large Body ◽  
Population Level ◽  
Tax Rates ◽  
Excise Tax ◽  
Cigarette Taxes ◽  
Excise Taxes ◽  
Long Run

IntroductionWhile a large body of literature suggests that tobacco control legislation—including fiscal measures such as excise taxes—effectively reduces tobacco smoking, the long-run (10+ years) relationship between cigarettes excise taxes and life expectancy has not been directly evaluated. Here, we test the hypothesis that increases in state cigarette excise taxes are positively associated with long-run increases in population-level life expectancy.MethodsWe studied age-standardised life expectancy among all US counties from 1996 to 2012 by sex, in relation to state cigarette excise tax rates by year, controlling for other demographic, socioeconomic and county-specific features. We used an error-correction model to assess the long-run relationship between taxes and life expectancy. We additionally examine whether the relationship between cigarette taxes and life expectancy was mediated by changes to county smoking prevalence and varied by the sex, income and rural/urban composition of a county.ResultsFor every one-dollar increase in cigarette tax per pack (in 2016 dollars), county life expectancy increased by 1 year (95% CI 0.60 to 1.40 years) over the long run, with the first 6-month increase in life expectancy taking 10 years to materialise. The association was mediated by changes in smoking prevalence and the magnitude of the association steadily increased as county income decreased.ConclusionsResults suggest that increasing cigarette excise tax rates translates to consequential population-level improvements in life expectancy, with larger effects in low-income counties.

Shopping for Lower Sales Tax Rates

2021 ◽  
Vol 13 (3) ◽  
pp. 209-250
Author(s):  
Scott R. Baker ◽  
Stephanie Johnson ◽  
Lorenz Kueng
Keyword(s):  
Shopping Behavior ◽  
Sales Tax ◽  
Fixed Costs ◽  
Tax Rates ◽  
Inventory Problem ◽  
Sales Taxes ◽  
Long Run ◽  
Wide Range ◽  
Short Run ◽  
State And Local

Using comprehensive high-frequency state and local sales tax data, we show that shopping behavior responds strongly to changes in sales tax rates. Even though sales taxes are not observed in posted prices and have a wide range of rates and exemptions, consumers adjust in many dimensions. They stock up on storable goods before taxes rise and increase online and cross-border shopping in both the short and long run. The difference between short- and long-run spending responses has important implications for the efficacy of using sales taxes for countercyclical policy and for the design of an optimal tax framework. Interestingly, households adjust spending similarly for both taxable and tax-exempt goods. We embed an inventory problem into a continuous-time consumption-savings model and demonstrate that this behavior is optimal in the presence of shopping trip fixed costs. The model successfully matches estimated short-run and long-run tax elasticities. We provide additional evidence in favor of this new shopping complementarity mechanism. (JEL E21, E32, G51, H21, H25, H71)

The Role of Behavioral Frictions in Health Insurance Marketplace Enrollment and Risk: Evidence from a Field Experiment

2021 ◽  
Vol 111 (5) ◽  
pp. 1549-1574
Author(s):  
Richard Domurat ◽  
Isaac Menashe ◽  
Wesley Yin
Keyword(s):  
Health Insurance ◽  
Field Experiment ◽  
Positive Selection ◽  
Adverse Selection ◽  
Low Income ◽  
Market Risk ◽  
Selection Model ◽  
Heterogeneous Effects ◽  
Low Income Consumers

We experimentally varied information mailed to 87,000 households in California’s health insurance marketplace to study the role of frictions in insurance take-up. Reminders about the enrollment deadline raised enrollment by 1.3 pp (16 percent) in this typically low take-up population. Heterogeneous effects of personalized subsidy information indicate misperceptions about program benefits. Consistent with an adverse selection model with frictional enrollment costs, the intervention lowered average spending risk by 5.1 percent, implying that marginal respondents were 37 percent less costly than inframarginal consumers. We observe the largest positive selection among low income consumers, who exhibit the largest frictions in enrollment. Finally, we estimate the implied value of the letter intervention to be $25 to $53 per month in subsidy dollars. These results suggest that frictions may partially explain low take-up for marketplace insurance, and that interventions reducing them can improve enrollment and market risk in exchanges. (JEL C93, G22, G52, H75, I13)

Regulatory focus and construal level theory on low-income consumer indebtedness: Evidence from an emerging market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Patrícia de Oliveira Campos ◽  
Marconi Freitas da Costa
Keyword(s):  
Decision Making ◽  
Low Income ◽  
Regulatory Focus ◽  
Task Complexity ◽  
Emerging Market ◽  
Psychological Distance ◽  
Construal Level Theory ◽  
Construal Level ◽  
Content Type ◽  
Low Income Consumers

PurposeThis study aims to further analyse the decision-making process of low-income consumer from an emerging market by verifying the influence of regulatory focus and construal level theory on indebtedness.Design/methodology/approachAn experimental study was carried out with a design 2 (regulatory focus: promotion vs prevention) × 2 (psychological distance: high vs low) between subjects, with 140 low-income consumers.FindingsOur study points out that the propensity towards indebtedness of low-income consumer is higher in a distal psychological distance. We found that promotion and prevention groups have the same propensity to indebtedness. Moreover, we highlight that low-income consumers are prone to propensity to indebtedness due to taking decisions focused on the present with an abstract mindset.Social implicationsFinancial awareness advertisements should focus on providing more concrete strategies in order to reduce decision-making complexity and provide ways to reduce competing situations that could deplete self-regulation resources. Also, public policy should organize educational programs to increase the low-income consumer's ability to deal with personal finances and reduce this task complexity. Finally, educational financial programs should also incorporate psychology professionals to teach mindfulness techniques applied to financial planning.Originality/valueThis study is the first to consider regulatory focus and construal level to explain low-income indebtedness. This paper provides a deeper analysis of the low-income consumers' decision process. Also, it supports and guides future academic and decision-making efforts.

Assessing algorithms for selecting countries to market new products to low-income consumers

2013 ◽  
Vol 3 (4) ◽  
pp. 1-12
Author(s):  
Michael D Metzger ◽  
Arch G. Woodside ◽  
John C. Ickis
Keyword(s):  
Emerging Markets ◽  
New Product Development ◽  
Low Income ◽  
Food Packaging ◽  
New Products ◽  
Subject Area ◽  
Bottom Of The Pyramid ◽  
Content Type ◽  
Decision Tools ◽  
Low Income Consumers

Title – Assessing algorithms for selecting countries to market new products to low-income consumers. Subject area – A consulting team to an international food packaging company (SDYesBox) is attempting to decide which algorithm is the most useful for selecting two national markets in Central America and the Caribbean. SDYesBox wants to work closely with its immediate customers – manufacturers in the dairy and food industry and their customers (retailers) – to develop and market innovative products to low-income consumers in emerging markets; the “next big opportunity for the dairy industry” according to SDYesBox. Study level/applicability – New product development and market selection in emerging markets in Latin America. Case overview – Five algorithms are “on the table” for assessing 14 countries by 12 performance indicators: weighted-benchmarking each country by the country leader ' s indicator scores; tallying by ignoring indicator weights and selecting the countries having the greatest number of positive standardized scores; applying a conjunctive and lexicographic combination algorithm; and using a “fluency metric” of how quickly consumers can say each country aloud. At least one member of the consulting team is championing one of these five algorithms. Which algorithm do you recommend? Why? Expected learning outcomes – Learners gain skills, insights, and experience in alternative decision tools for evaluating and selecting choices among emerging markets to enter with new products for low-income (bottom of the pyramid) products ands services. Supplementary materials – Teaching notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes.

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