Prices and social behavior: A study of adult smoking in Canadian Aboriginal communities

This paper provides the first estimates of tobacco price elasticity for adults in Canada's Aboriginal communities, distinguishing between two price effects: the direct effect, reflecting individual reaction to a price change, and the indirect effect, whereby price influences the individual by changing community smoking behavior. Estimates suggest a 10 percent increase in price decreases daily smoking by 0.75 percentage points (1.7 percent), occasional smoking by 1.39 percentage points (9.3 percent) and average smoking intensity by 0.15 cigarettes per day (2.9 percent). Further, the indirect effect doubles the response to a change in tobacco prices over the direct effect alone.