Ian Irvine

Global Health Warnings on Tobacco Packaging: Evidence from the Canadian Experiment

Abstract New health warnings on tobacco packaging in Canada became mandatory in January 2001. As of that time producers were required to print large-font warning text and graphic images describing the health consequences of using tobacco. This study uses micro data from two waves of Health Canadas Canadian Tobacco Use Monitoring Surveys bordering the legislation to investigate if the introduction of the warnings had any significant impacts on smokers. The recently drafted Framework Convention on Tobacco Control, under the sponsorship of the World Health Assembly, assigns a central role for this type of message. Our findings indicate that the warnings have not had a discernible impact on smoking prevalence. The evidence of their impact on quantity smoked is positive, though only at a relatively low level of confidence.

Saving behavior and wealth accumulation in a pure lifecycle model with income uncertainty

Several models of economic behavior currently compete for an explanation of individual wealth accumulation and savings patterns. In this paper we focus in particular upon the role of income uncertainty, and the role played by a retirement period, during which time expected earnings are zero. We find that income uncertainty can alter savings patterns over the lifecycle significantly, with the greatest influence on the wealth of young individuals. However, its influence on the aggregate stock of wealth is less than earlier theoretical work indicates.

Toxic Choices: The Theory and Impact of Smoking Bans

This paper first proposes a theoretical model of smoker behaviour that serves as a vehicle to evaluate workplace smoking bans. It is a nicotine inventory management model where smoking during one phase of the day impacts utility in other phases. Smoking intensity choice forms part of the optimization. Calibrated model simulations suggest that, with the exception of heavy smokers, workplace bans have small impacts due to substitution possibilities. Quantile regression estimates support the theory. However, restrictions on smoking in the home are an order of greater importance, even when instrumented. The policy conclusion is that workplace ban effectiveness depends heavily upon private choices.

Interprovincial versus international free trade: the brewing industry

This paper examines the potential welfare changes resulting from the removal of the interprovincial and international trade barriers currently in place in the brewing industry. Using a cost function estimated on plant-level data, the authors find that the potential gains from rationalizing production, following liberalizing trade between Canadas provinces, outweigh the further benefits that would result from free trade in the international sphere, given interprovincial free trade. The rationalization of the industry in terms of a reduced number of plants could lead to producer gains (on a recurring basis) equal to as much as 15 percent of expenditures at markets prices.

Tobacco Control Legislation and Resource Allocation Effects

In December 1995 Health Canada published Tobacco Control: A Blueprint to Protect the Health of Canadians which outlines the Government of Canadas new strategy to reduce tobacco consumption. Bill C-71, The Tobacco Act, was subsequently introduced, and received royal assent in April, 1997. The objective of this paper is to use input-output analysis to examine the resource allocation effects of a reduction in tobacco consumption that would likely result from this legislation. We find that significant reallocation effects may occur, and the employment effects may be more severe in the public than in the private sector.

The Redistributional Impact of Canada's Employment Insurance Program, 1992–2002

Pendant une dizaine d’années, à partir du début des années 1990, les principaux programmes canadiens de soutien du revenu ont subi d’importantes réformes. Pendant ce temps, l’économie a été plongée dans une profonde récession, puis a connu une phase de forte croissance. Dans cet article, nous examinons l’évolution de l’incidence distributive de l’Assurance-emploi (AE) durant cette période. Nos résultats indiquent que l’AE a eu, durant toute la période, un fort effet redistributif sur le revenu des individus et un effet un peu plus faible sur le revenu familial. Toutefois, nous montrons également que la distribution des prestations et des contributions a beaucoup changé, ce qui a affaibli l’effet redistributif. En fait, les prestations et les contributions ont toutes les deux un effet redistributif, alors que la structure des contributions est dégressive. Dans le contexte, ces résultats sont concevables, l’économie ayant fait face à la fois à un niveau élevé de chômage et aux pressions fiscales sur les dépenses gouvernementales.

THE WELFARE EFFECTS OF ALCOHOL TAXATION

This paper analyses the question of how to appropriately tax alcoholic beverages at a disaggregated level. Using the theory of tax reform, the social cost of raising revenue from different alcoholic beverages is calculated. The externality associated with alcohol consumption is explicitly modeled. In conjunction with unusually high wedges between producer and consumer prices, this leads to results rarely encountered in the literature of the welfare effects of taxation. The problem is approached by building a multistage budgeting model of expenditure. This is necessitated by the availability of elasticity information only for aggregates of the goods in question while pricing policy must be developed at a more disaggregated level. The model is applied to a data set for 1989 for the province of Ontario, Canada. We find that there is a major scope for welfare-improving tax changes, but that such changes depend crucially upon the magnitude of the externality associated with alcohol consumption.

A Taxing Dilemma: Assessing the Impact of Tax and Price Changes on the Tobacco Market

Sales of contraband cigarettes in Canada constitute a sizable component of the tobacco market. This illegal trade is associated with a loss in tax revenue and an array of illicit activities that involve gangs and organized crime. Various policy responses have been called for to counter this state of affairs. Increased policing and controls have resulted in the market share of the illegal product declining significantly to about 20 percent in 2010 from about one-third two years earlier. In addition to allocating more resources in order to control the problem, governments have been urged to lower tobacco taxes in the belief that lower relative prices for the legal product will induce smokers to switch in significant numbers away from the illegal supply source, perhaps also increasing tax revenues. This report analyzes the impact of tax and price changes on the composition of the cigarette market in the context of a demand-driven analytical model, in which smokers shift between legal and illegal products to a significant degree.

The simple analytics of tobacco taxation with illegal supply

This paper examines the impact of tobacco excise taxes where legal and illegal supplies coexist. The governments objective is to minimize cigarettes smoked in the economy (or to maximize revenue or to minimize illegal activity). It reacts to a competitive illegal supply in an adjoining jurisdiction. A model of consumer choice is used to demonstrate how demand response to tax changes can yield counterintuitive results. While the model mimics the Canadian market, similar situations characterize the US and European markets. A novel element of the paper is the treatment of externalities on the supply side rather than the demand side.

Crime, Punishment and the Measurement of Poverty in the United States, 1979-1997

The rate of incarceration has increased dramatically in the US since 1980. We explore the implications of this increased incarceration on national poverty measurement using micro data for the period 1979-1997. We make use of an as-yet unexplored data set on prisoner earnings, in conjunction with the Current Population Survey to compute earnings of the whole population. It is found that the traditional measurement of poverty, which omits this increased share of the population that has become institutionalized, understates the true degree of poverty in the nineteen nineties to a significant degree. This underestimation has increased during the time period of study. Furthermore, it is the depth of poverty associated with the higher incarceration rate, rather than the higher rate of incarceration alone that has had the greatest impact upon poverty. These results stand in marked contrast to western European economies and Canada.