Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
This paper analyses the compensatory behavior of smokers. Exploiting data on cotinine concentration?a metabolite of nicotine?measured in a large population of smokers over time, we show that smokers compensate for tax hikes by extracting more nicotine per cigarette. Our study makes two important contributions. First, as smoking a given cigarette more intensively is detrimental to health, our results question the usefulness of tax increases. Second, we develop a model of rational addiction where agents can also adjust their intensity of smoking, and we show that the previous empirical results suffer from estimation biases. (JEL D12, H25, I12)