Causal effect of early initiation on adolescent smoking patterns

A key concern in policy debates over youth smoking is whether preventing children from smoking will stop them from smoking as adults or merely defer initiation into smoking. This paper estimates smoking status in late adolescence viewing smoking at age 14 as an endogenous “treatment” on subsequent smoking, an approach which disentangles causation from unobserved heterogeneity and allows the model to capture the theoretical prediction that addictiveness varies across individuals. Exploiting large tax changes across time and across regions in Canada in the early 1990s, a structural model of potential outcomes is estimated to recover distributions of heterogeneous addictiveness. The results suggest that smoking is highly addictive for the average youth but less so for youths who actually do initiate early or are likely to be induced to initiate early at the margin. Thus, policies which deter initiation will reduce eventual smoking rates, but not by as large a magnitude as conventional econometric models might suggest. JEL Classification: I1, C3