Numerous studies have shown that prenatal exposure to cigarette smoke harms infant health, but is the damage to human capital permanent? We use cigarette tax hikes and anti-tobacco campaigns to evaluate the long run effects of early life exposure to anti-tobacco policy on child outcomes such as health and education. We connect these results to the impact of these polices on parental health behaviors such as smoking and drinking. In not considering how these policies may improve child outcomes our current understanding may be underestimating the benefits of anti-tobacco policy.

If one could run a controlled experiment, one would randomly assign higher cigarette prices and exposure to anti-tobacco media to a subset of families with a child in-utero. Subsequently, one would have "treatment" and "control" groups and could compare long term child outcomes between the two. In the absence of a nationwide controlled experiment, we compare states which increased tobacco taxes and launched tobacco media campaigns to those that did not as a natural experiment. Between 1991 and 2003, there were 68 state excise tax hikes of 10 cents or more with an average tax hike of 33 cents per pack. In addition to tax hikes, several states launched anti-tobacco campaigns. We make use of proposition 99, passed in California in 1988, which directed revenue towards anti-tobacco education, anti-tobacco media information drives, and encouraged the creation of the state's clean "in-door" ordinances. To assess the impacts of these polices on child outcomes we use health and child information from three separate data sets: the Behavioral Risk Factor Surveillance Survey, the American Community Survey, and the National Health Interview Survey. Preliminary results suggest large effects of in-utero exposure to excise taxes on lowering overall education and health for children between the ages of 5-17, but non-significant results on childhood asthma.

This is the first study to connect the long term economic consequences of in-utero exposure to anti-tobacco policy. Health economists have a long standing interest in how cigarette taxes influence smoking and improve health and labor market outcomes. This study offers additional evidence on how cigarette taxes affect health behavior with a focus on the benefits gained by the smoker's child. Smoking during pregnancy is a behavior associated with low-socio economic status mothers. Previous literature shows that cigarette taxes impact low socioeconomic status parents more. The analysis summarized here investigates if awareness policies regarding the effects of tobacco can improve long term outcomes for low SES children by changing the health behavior of their parents. To this end our study contributes to our understanding of the intergenerational transmission of inequality. If less in-utero exposure to cigarette smoke does improve a child's health and education, then that child's social mobility would improve. Policies specifically directed at stopping smoking during pregnancy could likewise help improve a child's life chances and lower overall inequality.

This project potentially makes a broader societal impact beyond contributing to understanding ways to ameliorate intergenerational inequality. Policy makers must weigh the full welfare effects of anti-tobacco policy. To do this, they need to account for both the costs and benefits of the policy. If there exists undocumented health or educational gains to the children of smokers, than anti-smoking policy could end up lowering expenditures in ways that have not previously been expected. Given that America faces both health-care reform and fiscal challenges, policy tools that improve the health of children could be of great benefit to society as a whole.

Project Report

Numerous studies show a negative effect of smoking during pregnancy on infant health: but is the damage permanent? I examine the implications of in-utero and early life exposure to cigarette excise tax hikes on a range of child health and human capital outcomes. Cigarette tax hikes represent a plausibly exogenous natural experiment for testing how maternal smoking and second hand exposure effects child health and human capital. This paper additionally sheds light on the ability of cigarette taxes to change health behavior in a way that improves long term child outcomes. This paper relied on fudning from the national science foundation to access restricted use national health interview survey child health data. I find that in-utero exposure to a tax hike causes large and significant improvements to a child’s wellbeing. Specifically, a 50 cent tax hike (2009$) causes a sixth of a day decrease in child's sick days from school in the past twelve months. Further a 50 cent tax increase causes a 1.5 percentage point decrease in the likelihood of having two or more doctor visits in the past twelve months. I also discover suggestive, though less robust, evidence that early life smoke exposure reduces hospitalizations, emergency room visits, asthma prevalence, grade retention, and some measures of disability status. I test the validity of my research design using event studies and a number of falsification tests. The event study shows that there are no differential trends in states that implement a large tax hike. The flasefication tests reveals no effect of cigarette tax hikes on child health measures that are not related to in-utero exposure to cigarette smoke including chicken pox, anemia, and food alergies. I also estimate coefficients for the long term effects of a cigarette tax hikes on different child and parent demographic groups. Comparing these to the related elasticity of smoking of the different subgroups shows that the children of mother's who are most responsive to quitting smoking due to a tax increase are the ones that experience the greatest later life health gains.

National Science Foundation (NSF)
Division of Social and Economic Sciences (SES)
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Michael Reksulak
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University of California Davis
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