Raising Taxes to Reduce Smoking Prevalence in the US: A Simulation of the Anticipated Health and Economic Impacts
To estimate health and economic outcomes of raising the excise taxes on cigarettes.
We use a dynamic computer simulation model to estimate health and economic impacts of raising taxes on cigarettes (up to 100% price increase) for the entire population of the USA over 20 years. We also perform sensitivity analysis on price elasticity.
A 40% tax-induced cigarette price increase would reduce smoking prevalence from 21% in 2004 to 15.2% in 2025 with large gains in cumulative life years (7 million) and quality adjusted life years (13 million) over 20 years. Total tax revenue will increase by $365 billion in that span, and total smoking-related medical costs would drop by $317 billion, resulting in total savings of $682 billion. These benefits increase greatly with larger tax increases, and tax revenues continue to rise even as smoking prevalence falls.
Increasing taxes on cigarettes is a unique policy intervention that reduces smoking prevalence, generates additional tax revenue, and results in significant savings in medical care costs.
Cigarettes; Cigarettes—Taxation; Computer simulation; Economic impact analysis; Economic impacts; Elasticity (Economics); Health impacts; Medical care; Cost of; Price elasticity; QALYS; Sickness Impact Profile; Simulation; Simulation methods; Smoking; Smoking--Health aspects; Smoking—Prevention; Smoking cessation; System dynamics; Tax; Tax revenue estimating; Taxation
Civil and Environmental Engineering | Civil Engineering | Computer Engineering | Economics | Engineering | Environmental Sciences | Public Health
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Franz, G. A.
Raising Taxes to Reduce Smoking Prevalence in the US: A Simulation of the Anticipated Health and Economic Impacts.
Public Health, 122(1),