TY - JOUR T1 - Is Smoking Inferior? JF - Journal of Human Resources JO - J Hum Resour SP - 1094 LP - 1120 DO - 10.3368/jhr.49.4.1094 VL - 49 IS - 4 AU - Donald S. Kenkel AU - Maximilian D. Schmeiser AU - Carly Urban Y1 - 2014/10/02 UR - http://jhr.uwpress.org/content/49/4/1094.abstract N2 - 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. ER -