European Tobacco Taxation and Youth Smoking - Findings from two decades of Health Behaviour in School-aged Children surveys

Abstract: Using data from the Health Behaviour in School-aged Children survey on smoking behaviors for roughly 440,000 European youths over the years 2001-2018, we show that a one euro increase in cigarette excise taxes reduces smoking prevalence (share of children who has smoked) by 2 percentage points using a two-way fixed effects model. This translates to a participation elasticity of -0.1, implying youths are less price sensitive than adults. This aligns with recent research which has questioned the previous consensus that youths are more price sensitive than adults. In line with similar research on American youths, we also show that the effect of cigarette taxes is decreasing over time and has had no significant effect when focusing on 2010-2018. For frequent smoking (once a week or more) we find no statistically significant effect for any time period, although this might be due to the fact that very few 11-15-year olds are regular smokers. We conclude that policymakers might have to consider other tools than taxation if they want to reduce youth smoking participation further.