Deliana Kostova, Hana Ross, Evan Blecher, and Sara Markowitz estimate that the elasticity of demand for cigarettes for teenagers in poor countries is a remarkably high -1.83. That’s doubly good news. First, it suggests that price incentives (as opposed to prohibitions) work well in keeping kids away from the habit. Second, it implies that cigarette taxes won’t collect much revenue from this group, and thus won’t drain away much discretionary income that might otherwise be used for education.
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Market Fix |
Professor Dieter Helm (Oxford) is a very fine fly fisherman, and an even better economist. If you haven’t done so, take a look at his new book “The Carbon Crunch: How We Are Getting Climate Change Wrong — and How to Fix It” for a bit of unconventional wisdom. He argues that politicians and the general public have not shown any real interest in addressing climate change. Helm argues that places like Europe should focus on setting a price for carbon that would cover consumption (and not just production), and that fracking could be a good “bridge” technology for reducing consumption of coal. The book is readable and insightful for those interested in the inside track on climate policy. 
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