Problem/Objective: Adolescent smoking is of particular interest from both a research and a policy perspective because smoking initiation and early smoking habits are known to have important implications for lifetime smoking. This study examines the impact of cigarette excise taxes on the level and intensity of youth smoking. An important contribution of this study is that we use panel data, the NLSY97, which spans a period of time over which significant changes have occurred in excise taxes.

Methods: We use dtandard regression methods to examine the effect of taxes on the level and intensity of adolescent smoking as well as on transitions between smoking states.

Results: The most meaningful results from this study are that cigarette excise taxes are associated with lower levels of regular smoking. This result appears to be due to a combination of adolescent experimenters being deterred from escalating to regular use and regular users quitting. We do not find evidence that cigarette excise taxes have a significant effect on preventing smoking initiation. Specifically, we find that approximately 24% of the decline in everyday smoking during the period 1997-2002 can be attributed to an increase in the excise tax.

Conclusions: These results are consistent with evidence that the effect of the cigarette excise tax is strongest for those adolescents smoking at higher levels. Thus, while excise taxes might not deter smoking initiation, there is a role for excise taxes in ultimately preventing smoking uptake or the likelihood that an adolescent smoker becomes an adult regular smoker.