Gilleskie, Donna B., and Koleman S. Strumpf. 2005. “The Behavioral Dynamics of Youth Smoking.” Journal of Human Resources 40(4): 822-866.

Individual smoking behavior persists over time, but is this repeated behavior attributed to past use or individual heterogeneity? Using longitudinal data on teens from all 50 United States from 1988 to 1992, we find a significant causal role for endogenous past cigarette consumption even after controlling extensively for observed and unobserved heterogeneity. We also find measurable evidence of different sensitivities to cigarette price depending on past use. These two findings suggest that a cigarette price increase will have a larger aggregate effect in the long run than in the short run as more individuals accumulate in the price-sensitive nonsmoking group.

Donna B. Gilleskie and Koleman S. Strumpf are associate professors of economics at the University of North Carolina at Chapel Hill. Dan Benjamin, David Blau, Bill Evans, Michael Grossman, Thomas Mroz, Rosalie Liccardo Pacula, Jeanne Ringel, and seminar participants at the 2000 ASSA/AEA Annual Meetings, the Triangle Applied Microeconomics Conference, the UNC-CH Health Economics Workshop, Brown University, the Federal Trade Commission, and the Kenan-Flagler Business School provided valuable comments on the paper. The authors thank the Department of Education for access to the restricted use National Education Longitudinal Survey (NELS) data. Researchers interested in replicating this work should contact the authors for information about obtaining restricted use NELS data. Financial support from the National Institutes for Health (grant #1RO1HD42256-01) is gratefully acknowledged.