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Look at Smoking Preferences Reveals ‘Left-Digit’ Price Effects

July 31, 2012    A recent study by UGA associate professor of psychology James MacKillop, published in the journal Addiction,  estimates a $1 per pack tax increase would generate a 197 percent increase in tax revenue, yielding almost $600 million in state tax revenues. The study assessed 1,056 smokers in Georgia, Rhode Island and South Carolina to evaluate how estimated purchasing decisions were affected by price increases, with prices varying from free to $20 per pack.

“As price goes up, consumption goes down, which reflects how much the product is valued,” said MacKillop, who directs the behavioral economics and neuroeconomics workgroup in the UGA Institute for Behavioral Research. “We looked at small intervals of price changes to better understand the relationship between cost and consumption and so we could make specific predictions about changes in prices to inform policymakers.”

For More Information:
http://medicalxpress.com/news/2012-07-reveals-left-digit-price-effects.html

A recent study by UGA   associate professor of psychology James MacKillop, published in the   journal Addiction, estimates a $1 per pack tax increase would generate a   197 percent increase in tax revenue, yielding almost $600 million in   state tax revenues.  The study assessed 1,056 smokers in Georgia, Rhode Island and South Carolina to evaluate how estimated purchasing decisions were affected by price increases, with prices varying from free to $20 per pack.  “As price goes up, consumption goes down, which reflects how much the product is valued,” said MacKillop, who directs the behavioral economics and neuroeconomics workgroup in the UGA Institute for Behavioral Research. “We looked at small intervals of price changes to better understand the relationship between cost and consumption and so we could make specific predictions about changes in prices to inform policymakers.”

Read more at: http://medicalxpress.com/news/2012-07-reveals-left-digit-price-effects.html#jCp
A recent study by UGA   associate professor of psychology James MacKillop, published in the   journal Addiction, estimates a $1 per pack tax increase would generate a   197 percent increase in tax revenue, yielding almost $600 million in   state tax revenues.  The study assessed 1,056 smokers in Georgia, Rhode Island and South Carolina to evaluate how estimated purchasing decisions were affected by price increases, with prices varying from free to $20 per pack.  “As price goes up, consumption goes down, which reflects how much the product is valued,” said MacKillop, who directs the behavioral economics and neuroeconomics workgroup in the UGA Institute for Behavioral Research. “We looked at small intervals of price changes to better understand the relationship between cost and consumption and so we could make specific predictions about changes in prices to inform policymakers.”

Read more at: http://medicalxpress.com/news/2012-07-reveals-left-digit-price-effects.html#jCp

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