Higher Cigarette Taxes = More People on Food Stamps?

A new study finds that poor smokers compensate for higher cigarette taxes by going on SNAP



Progressive environmental activists are fond of observing that "everything is connected to everything else." But when it comes to economics, progressives utterly ignore this lesson, e.g., hiking minimum wages. Two Cornell University economists have just published a working paper, Behavioral Responses to Taxation: Cigarette Taxes and Food Stamp Take-Up" that finds that many poor cigarette smokers compensate for cigarette tax hikes by applying for the Supplemental Nutrition Assistance Program. In other words, they often offset the higher costs for their cigarettes by resorting to government food subsidies. From the study:

We find that an average cigarette tax pass-through rate of 0.75 triggers an average increase in yearly household cigarette expenditures between $100 and $250. We also find that low-income smoking households are 50% more likely to enroll in food stamps relative to their non-smoking counterparts. Exploiting variation in state cigarette taxes across the US states over one decade, we then show that cigarette tax increases are significantly associated with higher food stamp enrollment. We find strong evidence that these effects are exclusively driven by smoking households: when taxes increase by $1, each additional carton of monthly cigarette consumption increases food stamp enrollment by 0.8 ppt [percentage point].

…we find that a $1 increase in cigarette taxes increases the monthly take-up probability for low-income smoking households by between 2 and 3ppt [percentage point] from a baseline probability of about 25%….

Over-all, the findings suggest that the recent expanded use of cigarette taxes to curb smoking has likely contributed to the recent increase in food stamp enrollment. Moreover, insomuch that the option to enroll in public assistance programs can decrease the effectiveness of cigarette taxes in nudging people to reduce smoking, our findings may also help explain the recent stagnation in cigarette consumption despite unprecedented rises in cigarette taxes.

As this study indicates, government nudges often have unintended consequences.

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    1. Oh SNAP!

  2. But progressives are going to think it’s a GOOD thing that more people are on SNAP. Higher taxes, more people on assistance?win-win!

  3. I may accept that this is an unintended consequence, but it certainly strikes me as a positive one, as far as progressives go. More people on social programs makes it harder to cut them, higher taxes fish money out from smokers of all social levels (even if proportionally more poor than middle and upper class people smoke, there are a lot more of the latter), and smoking percentage of population doesn’t change, allowing non-smoking organizations to continue operating. Win all around!

    1. Its not even unintended. Taking more money from poor people makes them poorer is hardly an unforeseeable consequence.

      Foreseeable consequences are not unintended.

      You are responsible for the foreseeable consequences of what you do, regardless of whether you wanted those consequences or not.

  4. A few years back I was driving through WV on a road trip , and a couple (white, not that it matters) approached me and offered to buy my drinks and snacks on their SNAP card (or whatever the food stamps program was) at a gas station in exchange for buying them a pack of smokes. I didn’t want to do it but ended up giving in.

    So my completely representative sample size of one supports this finding.

    1. I didn’t want to do it but ended up giving in

      and hence avoided squealing like a pig? 😉

  5. I’m sorry, but we all know the only consequence of a higher tax on any commodity is that fewer people consume that product, just as the state intends.

    1. Which is why privileged, rich White men are the only ones who can afford to drink, it seems.

      People with more education and higher socioeconomic status — generally white men — tend to drink more than others, according to a new study by the Organization of Economic Co-operation and Development, an international organization that studies global trends.

      This is why, of course, we’re the only internet forum with its own drinking game. You think the baristas co-op that is the Daily Kos could afford to play along? They have to budget for a fucking case of Natty Light.

      1. You know who else had an international organization that studied global trends ….

        1. Nick Fury?

        2. The Zionist Illuminati Freemasons?

      2. What’s this now? a Reason drinking game, you say?

      3. Seems a little hard to believe, doesn’t it? I wonder what the results would be if you hooked up the surveyed to a lie detector test….

        1. You have the chuztpah to show your meeskeit pisk around these parts after shitting all over yourself last night by fucking up the most simple Yiddish terms like the dumb balagoleh paskudnik son of a kurva you are?

          In short, Ich hob zol in bod, dein mama leck mir in schvantz, un dein papa is a faygeleh. Du farshtayst mir, Internatsyonal Yid?

    2. FoE, don’t be silly. Consequences don’t matter. Only intentions. In fact, consequences are just an annoyance. Feel free to ignore them.

      1. Drink!



    3. Except for labor and productivity of course.

  6. I think I am in the minority around here on sin taxes, but let me explain why I think they aren’t necessarily bad:

    1. We have to tax something, because even a minimal government cannot run on donations.

    2. We know that taxing something suppresses it.

    3. Therefore, if we must suppress something, isn’t it better to suppress something that is a) voluntary, and b) unhealthy?

    So isn’t taxing/suppressing smoking better than taxing/suppressing retail sales, or income, or investment, or jobs, or home ownership, etc.?

    1. Fuck you, cut spending.

      1. You’re missing my point….

    2. Simple – if you tax something because it’s necessary to have tax, and you suppress it, what do you do with tax shortfall?

      Next, slice of people deciding that what “those others there” do is unhealthy and voluntary, so they should be paying, while “what we do here” (e.g. coffee drinks in all their varieties) is totally fine, make for a shitty, more arbitrary society.

      Finally, taxes that pay for necessities should be as broad as possible, since they pay for what everybody uses, hence, everybody should contribute to it.

      1. But since all taxes suppress, you are still risking shortfalls by taxing anything. E.g. tax retail sales, and Amazon or the county or state next door gets more business.

        I agree that the decision about what’s negative is somewhat subjective, and in theory subject to abuses. (E.g. should we pay for AIDS research and treatment by taxing gay men?)

        I know the “broad-based” argument, but am not convinced it’s better to broadly suppress a good activity than to narrow suppress a non-good activity.

        1. Advantage of broad-base approach is that suppression effect you have is small, as it’s divided over a large body. If your tax that you take is (relatively) small percentage of growth rate of said activity, you get both state income and growth. Setting it there is, of course, the real trick. Narrow means you have to hit the un-good activity hard, which will result in shortfall (and un-good activity moving underground, so suppression doesn’t quite do it).

          TLDR: Set sin against sin, sloth against greed, and stack the odds in favor of sloth, so people can’t be bother to avoid your tax.

          1. That’s a good point. Yes, if the tax is low, the suppressive effects are minimized (though they still might exist).

            I’ll admit that I think one advantage of sin taxes is that they are avoidable. I also like lotteries as ways of raising revenue, because those are avoidable as well.

            But I am still not convinced that even light taxation/suppression of inarguably healthy activity is better than targeted taxation/suppression of unhealthy activity. It seems like the anti-sin tax argument leads to bad outcomes: should cities and counties give up traffic fines in exchange for higher gas taxes? I’d say no, because I’d rather revenue be raised from suppressing speeding than from suppressing driving.

    3. It’s not a matter of trade-offs, though. You don’t get an increase in the cigarette tax, and a decrease in other taxes, or even a temporary halt in those taxes. The cigarette tax goes up, and SO DO ALL THE OTHERS. Thus, it’s a mistake not to fight every tax increase.

      I used to think more toll roads would make sense, because you could reduce the gasoline tax, or something else. Nope – you’d just get a strict increase in taxes, because that’s how government works.

      Casinos in PA were sold on the premise that property taxes would be entirely eliminated by casino revenue. So, yeah, 10 years later, property taxes are still around.

      1. I understand your point, but I am speaking on the theoretical level of the virtues of one tax vs. another, not the tendencies of taxes to pile up and for politicians to lie.

    4. Define “unhealthy”. Show your work. Then figure out how other people might think having a few beers per night is “unhealthy”. Or eating fat or sugar. Then extrapolate from there.

      You figure it out yet?

      1. I think we can all agree that taxing you would be acceptable.

        1. You tax me every time you open your mouth. Or write a comment. Whatever. See how taxed I am? I can barely type.

        2. Also, can we tax people like you and Los Doyers who haven’t seen Jaws? I mean, if anything should be taxed, it’s you.

          1. Don’t you think wasting time on frivolity like movies is the real sin here?

            1. Please please tell me we can tax worst-ness. PLEASE.

              1. Well, I mean, yeah. I think so.

          2. I haven’t seen Jaws. DEAL WITH IT

            1. We already knew you were an idiot. Nicole comes as more of a surprise.

          3. I FUCKING WATCHED IT YOU PRICK. About as good as Deep Blue Sea.

            1. The one good thing about Deep Blue Sea was Saffron Burrows.

      2. My work: smoking is unhealthy compared to income, or retail sales, or investment, or owning real estate, all of which are taxed. You’re not going to dispute that, are you?

        My point is not to advocate a tax system based on determining exactly what is unhealthy, and to what degree. My point is that arguments against sin taxes seem to ignore the fact that all taxes suppress activity, so why not choose what to suppress? Is it truly sensible (and libertarian) to say: “No, don’t suppress tobacco and alcohol use, instead suppress income and savings and investment!”?

        1. My work: smoking is unhealthy compared to income, or retail sales, or investment, or owning real estate, all of which are taxed. You’re not going to dispute that, are you?

          No, but I’ll dispute that the state should promote healthy activities and suppress unhealthy ones. Unhealthy does not mean objectively undesirable, and healthy does not mean objectively desirable.

          1. Well, then look at this in terms of desirable/undesirable, as objectively as possible. Since taxation will suppress things, which would you rather suppress?

            a. Usage of tobacco, alcohol, and (assuming they are legalized) marijuana and other recreational drugs, or

            b. Income, savings, investment, jobs, home ownership, and retail sales?

            1. Childbearing.

        2. I have a few cigarettes a night. Is that “unhealthy”? Not according to the doctors I go to; that few is pretty much irrelevant, especially since I exercise. But I get taxed because you say my habit is unhealthy. Well, guess what? Fuck you.

          Like I said, just extrapolate. But none of that matters anyway. Using taxes to promote “positive” outcomes is exactly what the progressives we decry all the time do. So basically, you want to be just like them as long as you get to choose the “sins”.

          1. I am not advocating taxation to promote positive outcomes. I am acknowledging the necessity of some form of taxation, and the (non-partisan) reality that taxes suppress activity.

            So let me put it this way, with some rough numbers: You smoke a pack a week, and the state tax is $1.50/pack, for a total tax of $78/year. Would you consider it better (or worse or neutral) if the cigarette tax were eliminated, and your state income tax went up by $78/year?

      3. There are people called medical researchers who study these things using the scientific method and they have found that cigarettes are unhealthy.

        1. A consensus you say?

          Teh science is settled!

    5. Tax ice cream and Tastycakes.

  7. This reminds me of a lovely article a few days ago on Cafe Hayek on the subject of welfare subsidizing employers willing to pay low wages.

    you repeat the popular-in-Progressive-circles assertion that (quoting you) “we subsidize low wage employers” through government welfare programs such as food stamps, Medicaid, and housing assistance.

    Basic economic reasoning reveals your argument to be backwards. Welfare payments of the sort that you mention make work a relatively less attractive option for welfare recipients and, thus, reduce the labor supply. One consequence is that wages paid by employers to their low-skilled workers are raised (and not, contrary to your mistaken suggestion, lowered). Thus, far from being subsidized by most government welfare programs, Wal-Mart, McDonald’s, and other employers of many low-wage workers are harmed by them.

    Let’s take food stamps, which are available to eligible families whether or not a family member works or not. Indeed, when people are not working, they are more likely to be eligible for food stamps since their family incomes will be lower. Therefore, SNAP is likely to raise, and not lower a worker’s reservation wages ? the fallback position if she loses her job. This will tend to contract labor supply (or improve a worker’s bargaining position), putting an upward pressure on the wage.

    1. The logic of that particular proggy point was always nonsensical. If it doesn’t make economic sense for Walmart to pay a drone a “living wage”, it doesn’t make sense to pay them that. It’s not like their labor would suddenly be worth more if Walmart had to pay for what welfare benefits are partially covering.

      I don’t know how the argument is even supposed to work in the progs’ heads, it’s that bad.

      1. It’s like they think the people would disappear from the face of the earth if they weren’t on welfare, I think. I guess because evil libertarians would let them die in the streets or whatever.

        1. Without sarcasm, this is literally what they think. In fact, if you ask, they’ll probably tell you hundreds die in Chicago or Mobile or Houston for lack of food and shelter.

          1. The sidewalk out front right now is fucking littered with corpses.

          2. That’s what they rationalize, the root is merely their envy and greed.

      2. I don’t know how the argument is even supposed to work in the progs’ heads

        I *think* it’s supposed to be something like: “Employers and customers make so much money that a living wage for all employees is in the noise.”

  8. This is literally the most delicious thing I have ever read on H&R.

  9. “As this study indicates, government nudges often have unintended consequences.”

    While the consequences might be unintended. They certainly aren’t unpredictable.

  10. government nudges often have unintended consequences.

    I had something for this… Something about foreseeable consequences not being unintended.

  11. Progressives love their regressive taxes. And have no problem advocating a policy that harms low skilled poor people, as long as they can feel great about “advocating” for the downtrodden.

  12. Oh. I thought the article was going to say that as people smoked less, they ate more, so needing food stamps more.

  13. The relation to government aid makes sense.

    Contrary to what some seem to believe, I think there ARE a good number of people out there who do NOT simply automatically grab at every honey pot that is waved in their direction, feeling instead that it’s wrong at some level to take aid you don’t need and perhaps, in doing so, depriving someone else of that aid. HOWEVER…. if you suddenly throw into the mix the feeling that *the government* is unjustly stealing your money in a discriminatory way, then a natural response is to look for a way to take it back. Aid programs are an obvious pathway.

    – MJM,

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