Contemporary Economic Policy
This paper empirically tests the effect of clean indoor air laws on smoking. Public place clean indoor air laws restrict cigarette smoking in public places such as restaurants. Private place clean air laws regulate smoking in private work places as well as in public places. This study uses a time series of cross sections of the 50 states of the United States and Washington, D.C., from 1975 through 1985, to estimate single equation and simultaneous equation models of cigarette demand. The single equation results indicate that both the public place law and the private work place law have a negative effect on cigarette demand. However, a test for endogeneity shows that the enactment of clean indoor air laws is a function of cigarette demand. Results from a simultaneous equations model indicate that the public place law has a significant negative impact on cigarette demand, while the work place law has no effect on cigarette demand. Although these results demonstrate that only states with low levels of smoking have passed work place clean air laws, the results do not imply that the level of smoking would not decrease if such a law were imposed in all states.