Cigarette Demand in the United States

By Emily Galloway

Faculty Mentor: Professor Margaret Ray

This project analyzes cigarette demand in the United States from the years 1964 to 2018. Using the number of cigarette packs purchased in any given year as the dependent variable, a time series OLS regression is run with price, income, population, and the previous year’s dependent variable as the independent variables. Findings indicate price is insignificant, which is common in addictive substances. Income is significant, with its relationship to the dependent variable possibly attributed to societal factors. Population is significant, and its results remain in line with basic economic theory. The independent variable equal to the previous year’s dependent variable is proven to be the most significant factor, which is expected in addictive substances; the total number of smokers in one year, and therefore the number of cigarettes purchased, is heavily dependent upon the number of smokers in the year previous. Cigarette demand in the United States remains complicated by several societal factors, only some of which have been used in this regression. Further, more rigorous research into the reasons for the continued decline of cigarette demand must be completed, especially as new anti-smoking policies arise.