PT  - JOURNAL ARTICLE
AU  - Kenkel, Donald S.
AU  - Schmeiser, Maximilian D.
AU  - Urban, Carly
TI  - Is Smoking Inferior?
AID  - 10.3368/jhr.49.4.1094
DP  - 2014 Oct 02
TA  - Journal of Human Resources
PG  - 1094--1120
VI  - 49
IP  - 4
4099  - http://jhr.uwpress.org/content/49/4/1094.short
4100  - http://jhr.uwpress.org/content/49/4/1094.full
SO  - J Hum Resour2014 Oct 02; 49
AB  - In this paper we estimate the causal income elasticity of smoking participation, cessation, and cigarette demand conditional upon participation. Using an instrumental variables (IV) estimation strategy, we find that smoking appears to be a normal good among low-income adults: Higher-instrumented income is associated with an increase in the number of cigarettes consumed and a decrease in smoking cessation. The magnitude and direction of the changes in the income coefficients from our OLS to IV estimates are consistent with the hypothesis that correlational estimates between income and smoking-related outcomes are biased by unobservable characteristics that differentiate higher-income smokers from lower-income smokers.