Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/92575
Authors: 
Kang, Myong-Il
Ikeda, Shinsuke
Year of Publication: 
2010
Series/Report no.: 
ISER Discussion Paper, Institute of Social and Economic Research, Osaka University 782
Abstract: 
By combining our broad panel survey of Japanese adults from 2005 to 2008 and actual cigarette tax data, we investigate how smoking behavior including responses to tax hikes depends on time discounting and its biases, such as hyperbolic discounting and the sign effect. Cigarette consumption displays significantly positive correlations with discount rates and the procrastinating tendency, and negative correlations with the sign effect. Hyperbolic, procrastinating, and naïve respondents decrease their after-tax-hike cigarette consumption more than the others, implying that, irrespective of the preannouncement of a future tax hike, they postpone smoking moderation until the tax hike actually takes place. Finally, the government's revenue from cigarette tax peaks at a JPY 29.92 (around USD 0.28 using the conversion rate [107.16] in February 2008) higher tax per cigarette than the present actual level.
Subjects: 
smoking
cigarette tax
time preference
discount rate
hyperbolic discounting
procrastination
the sign effect
JEL: 
I18
Z00
Document Type: 
Working Paper

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