The impact of smoking bans on alcohol demand

Abstract

Although many studies find that smoking bans reduce cigarette demand, arguments can be made for smoking bans also affecting alcohol demand. Accordingly, in this paper we address the determinants of state-level alcohol demand, which we treat as a function of various economic and demographic variables, as well as smoking bans. Results reveal that smoking bans reduce the demand for beer and spirits. Furthermore, smoking bans tend to intensify the complementary relationship between cigarettes and alcohol, which suggests that smoking bans have altered consumer demographics in the alcohol market. We also find the nature of the smoking ban matters, as bans specific to restaurants and bars lead to larger reductions in beer and spirits consumption, but increase the demand for wine.