Does economic growth induce smoking?—Evidence from China

I use Chinese panel data to estimate the exogenous effect of economic growth on individuals’ smoking behavior. By instrumenting the endogenous provincial GDP growth rate with a dummy variable indicating whether the province has a new leader, my results show that a higher economic growth rate reduces overall cigarette consumption, but does not reduce the overall smoking participation rate. In addition, a higher economic growth rate reduces cigarette consumption of male but not female. It reduces cigarette consumption of the lower-middle and senior age males, but does not significantly change consumption among the young males. Of these three groups, only the middle-aged males show a decrease in their smoking participation rate with higher economic growth. Overall, the Chinese data show that economic expansion reduces men’s smoking amount. But the overall adjustment is intensive, rather than extensive.