Class 12: Smoking and Demand Elasticity

The goal of this module is to understand instrumental variables as a causal identification strategy. We’ll do this in the context of smoking and cigarette prices. Effectively, we want to estimate a demand curve for cigarettes, accounting for the fact that movements in quantity and price derive from changes in both supply and demand.


  • Explain some of the history of smoking in the U.S.
  • Describe the empirical barriers to estimating demand curves


  • Review homework 2 and matching/weighting in practice


Angrist, J., and J. Pischke. 2009. Mostly Harmless Econometrics. Princeton, NJ: Princeton University Press.
Gruber, Jonathan. 2001. “Tobacco at the Crossroads: The Past and Future of Smoking Regulation in the United States.” Journal of Economic Perspectives 15 (2): 193–212.
Ross, Hana, and Frank J Chaloupka. 2003. “The Effect of Cigarette Prices on Youth Smoking.” Health Economics 12 (3): 217–30.