CIGARETTE CONSUMPTION CONTROL

CIGARETTE CONSUMPTION CONTROL 18

CIGARETTECONSUMPTION CONTROL

KevinChou

Econ490

April9, 2015

RichardShumway

ExecutiveSummary

Theresearch project aims at understanding the factors that affect therate of cigarette consumption. The research involves looking at fourmajor factors with respect to cigarette consumption. These factorsare: the death rate due to cigarette-related lung cancer, the taxrate imposed on cigarettes, the effects of corn prices on cigaretteproduction and the relationship between household income and the rateof cigarette consumption. The research is done using public secondarysources, which are trusted government documents produced bywell-known, and recognized bodies and organization. The data isretrieved from the Centre for Disease Control (CDC), the NationalCancer Institute, The US Census Bureau and Statistics. The data isreliable and covers details of the information collected up to theyear 2009. The data used is for all the 50 states of the UnitesStates of America. Analysis is done using Stata software, and modelsare achieved from it. The statistics are analyzed in terms ofregression, estimates, heteroskedasticity and scatter plots. Theresults are interpreted by looking at the analysis and reading thescatter plots. Once the conclusion is reached, it is compared to thehypotheses being tested, and whether they are null or should bedropped. The research is carried out in accordance with its pre-setobjectives, and any further studies or extension of the research willbe recommended at the end of it.

Abstract

Cigarettesmoking is a health hazard (Doerr, 1982). It is known to cause lungcancer and other respiratory complications (Jack, 2008). The researchproject aims at determining the factors that can reduce the rate ofcigarette smoking in the country. There has been a recent rise in thenumber of lung cancer patients due to cigarette smoking. The patientsare mostly above 45 years old, but they took up the smoking habitwhen they were between 16 and 20 years old, and continued until theyreached old age. With such data, it will be determined whetherincreasing taxes on cigarettes will reduce their consumption rate.The financial stability of families will also be studied in a bid toestablish whether it relates to cigarette consumption. There is alsothe aspect of corn prices. These prices are speculated to influencethe cost of cigarettes due to the related production expenses. Theresearch will come up with appropriate recommendations.

Introduction

Accordingto the National Cancer Institute, cases of lung and throat cancerhave been on the increase in the recent years. It is attributed tothe inhaling of poisonous gases, and mostly, carbon monoxide. Theresearch institute confirms that cigarette smoking is one of thebiggest modern contributors to lung cancer and other trachealcomplications, including lung failure. The US Census Bureau notesthat the population of smokers is no longer comprised of old peopleonly. There are people as young as in their teens who smoke more thanone pack of cigarettes a day. Further research shows that this ismade easy for them by their smoking parents, who introduced them tosmoking by carelessly leaving cigarettes at their disposal. The priceof cigarettes also allows people to buy lots of them without feelingany major financial constraints. In a research carried out byStatista (The statistics portal), even the low-income earners canafford to buy a cigarette a day.

Theresearch is of major concern because of the impact cigarette smokinghas on the population and economy of the country. Excessiveconsumption causes health problems, and at the same time increaseshospital expenses for smokers and their families. On the other hand,cigarettes are a big contributor to the country’s economy. Theirreduced consumption will reduce the returns that the governmentearns. There is a possibility of job losses because the amount oflabor required in cigarette manufacturing and packaging companieswill reduce tremendously. However, this will also reduce the numberof deaths due to cigarette-induced lung cancer. It will also maintaina steady income for families since the amount channeled towardsbuying cigarettes and settling medical bills will be reduced.Weighing the pros and cons of each side of this balance is importantin maintaining a steady economy of healthy people (Kluge, 1996).

TheUnited States government has enacted taxes on cigarettes in allstates to raise revenue, with an indirect aim of reducing the amountof cigarettes consumed. The number of lung cancer deaths recorded inthe 50 states has been on the increase in the recent past. Callison(2012) notes that there has been excessive abuse of cigarettes andalcohol in the United States and an increase in the amount of tax is,therefore, a good measure towards protecting people againstthemselves.

Objectivesof the research were well outlined to be a guide throughout theexperiment and to avoid deviation from the areas of focus. Thespecific objectives are stated below:

Specific Objectives

  1. To determine the effect of cigarette sales tax on cigarette consumption

  2. To determine the effect of the amount of income earned on the rate of cigarette consumption.

  3. To identify how the price of corn affects production and consumption of cigarettes since corn is a major substitute crop to tobacco.

  4. To determine how the increasing number of lung cancer patients affect cigarette consumption based on its effect as a deterrent.

Literature Review

Researchershave carried out a lot of research on drug abuse, its effects on theeconomy, and the factors that can promote its reduction. A recentresearch by Callison (2012) on the effects of cigarette smoking onnon-smokers showed that smoking of cigarettes has diverse effects onpassive smokers economically and health wise. These effects weresometimes seen to be worse on the passive smokers than on the activeones. In analyzing the by-products of a burning cigarette, it wasfound out that a lot of tar, carbon monoxide and nicotine wereemitted. The nicotine and tar were mostly absorbed by the smokers,but some of the carbon monoxide was exhaled and inhaled by thepassive smokers. Carbon monoxide is a colorless, odorless gas thatcan be inhaled unknowingly. The red blood cells in the human body areaffected, stopping them from carrying oxygen throughout the body.Without oxygen, the body tissues start to fail, and one can easilydie without specialized medical treatment. Other effects on thepassive smokers included eye and throat irritations due to the smoke.The research concluded that there were far much worse effects ofcigarette smoking on the passive smokers than in the active ones. Thepassive smokers spend a lot pf money on hospital bills due tocomplications of passive smoking. It recommended thatcigarette-smoking be limited to smoking zones. Smoking zones aresections or rooms where smokers can consume cigarettes at their ownpleasure, without affecting non-smokers. Test smoking zones were putup in streets and had a positive impact on the general population.Smokers agreed to use them for their smoke and were happy that theywould no longer be bothered or bother others while going on withtheir smoking habits (Callison,2012).

Anothersimilar research was done by the Institute of Health Sciences (2013)to compare the salaries people earned and the amount of alcohol theytook. The aim of this research was to establish that highly paidworkers drank more alcoholic drinks than the low-income earners. Astudy was carried out in a few factories, and subjects were drawnfrom various work groups within these factories. The work groupsstudied were of different salary levels. At the end of the month,when people received their salaries, the highly paid workersconverged at local pubs and bars to share a drink.

Thesame research was stretched to measure the reduction of alcoholconsumption in the increasing taxes on the drinks. It was observedthat there was reduced consumption as the taxes increased. Theincrease in taxes resulted in the increase in beer prices, and theeffect was felt by consumers. Many people complained of the increasedprices of beer, and some opted to change their drinking habits. A fewquit while many limited the volumes they drank per week (Jack, 2008).The reduction was significant to the extent that bar owners were alsocomplaining of reduced incomes from the sale of beer. The findings ofthis part of the research showed that people managed to consume largevolumes of alcoholic drinks due to their affordable prices. The moreexpensive spirits and vodkas had few consumers in local pubs andrestaurants. It was also concluded that drinking of alcohol can becontrolled by how each bottle of beer is priced. The cheaper it is,the more it is consumed. Governments can apply this technique tocontrol alcohol consumption, especially among students. The rate ofalcohol consumption among high school and college students is anissue of major concern. The cheapness of the drinks allows thestudents to buy lots of them at a very little cost. It results inmissed classes and failed exams, and the eventually graduation ofunder-qualified students. The resulting effect is a market ofunderperforming employees and a deteriorating economy (Healey, 2001).

Thesame study looked at the fluctuating price of barley and its effecton the price of beer. Due to the changing weather and naturaldisasters such as hurricanes and dry spells, the barley harvestsvaried annually. The cost pf production, recovery, maintenance,harvesting and storage also varied. In addition to these factors,there was variation in the prices of the fuel that was needed totransport the barley to the factories for processing. The result ofthis was a varying price of beer production (Rex, 1931). Its effectsincluded a fluctuation in beer prices, and an average of a relativelyhigh price was common. The change in prices of beer with changingavailability and cost of production of barley had a direct effect onthe price of beer. The more expensive production was, the moreexpensive the beer was. With this increase in prices, consumersreduced their weekly intake. Some of them opted for alternativedrinks rather than beer (Healey, 2001).

Thedirect relationship between the production of a consumer substanceand its market price affects the rate at which it is consumed. It isnormal to avoid buying something because of its increased price,although people adapt to this price after a while. According to theabove mentioned research studies, it is important to control theintake or consumption of legal drugs that are not medicinal.Cigarettes and alcohol are legal but should not be consumeduncontrollably. They are addictive and have negative effects whentaken beyond the recommended limits. Smoking of cigarettes causeslung cancer and other respiratory infections and disorders. It alsocauses bad breath and colored teeth. Economically, cigarettes canaffect the livelihood of a family if most of its income is channeledto purchasing of cigarettes. Excessive consumption of alcohol causesimpaired judgment, with resultant accidents such as the grizzly onescaused on roads by drunk drivers (Callison, 2012). In terms ofhealth, alcoholic drinks harm the liver by causing liver cirrhosis.The disease is life-threatening if not detected in its early stages.Alcoholics also spend a lot of money in rehabilitation centers, thusalcohol consumption affects the economy negatively. Companies shouldnot use people’s addictions of these drugs to make more revenuethrough great sales. They should regulate production and consumption,and also educate consumers on their effects. This research isessential in determining the effects of smoking in the economy and indeveloping the objectives of this report.

Economic Theory and Hypotheses

Theeconomic theory used is that of supply and demand. The theoryanalyses the relationship between demand for a product and itssupply. The center of this relationship is the price of the item. Inequilibrium, the demand and supply have to balance out. Increase ordecrease of either of these two components has a direct effect on theprice of the item. An increase in demand when supply is constantleads to a higher equilibrium price. If the demand decreases at thesame constant supply, a lower equilibrium price is realized due to asurplus. An increase in supply with constant demand shifts the supplycurve to the right and leads to a lower equilibrium price due to theresulting surplus. If supply decreases while demand remains constant,a higher equilibrium price results due to the shortage that isrealized.

Thedemand and supply relationship can be observed in this study andanalyzed to prove its effects in the market. The study will look atthe demand of cigarettes. Cigarettes are normally in high demand,especially in chain smokers. Research shows that some people consumemore than one pack a day and more than ten packs a week. The rate ofconsumption is favored by the ease of availability of cigarettes,meaning that their price was low or affordable during the time of theresearch. The low prices meant that production costs were also low.The resulting bulge in the market creates a very high supply ofdifferent kinds of cigarettes, giving consumers a wide range tochoose from. These competitors create a very big supply ofcigarettes. They try to fight each other out by lowering their priceper cigarette, and the effect is a drop in the meeting point ofsupply and demand, meaning that the price of cigarettes dropstremendously

Fourhypotheses were formulated to support the study and help achieve itsobjectives.

  1. An increase in cigarette sales tax will reduce the levels of cigarette consumption.

  2. The increased amount of income earned by a family increases the amount of cigarettes consumed by that family.

  3. The increase in corn prices will reduce the rate of cigarette consumption

  4. The increasing number of lung cancer patients will reduce cigarette consumption due to the effect of deterrent.

Thehypotheses were to be tested throughout the research to come up withrelevant results and eventual theories.

Empirical Model and the QuantitativeTools Applied

Thestudy will require five variables. These include one dependentvariable, which is the percentage of adult smokers in each of the 50states, and four independent variables. The independent variables arethe tax rate imposed on cigarettes in each state, the median incomeper state, the cancer death rate in all the 50 states and the priceof corn in each state.

Thefour independent variables, which are the tax rate on cigarettes,median income per family, cancer related to smoking and the price ofcorn per state, and the dependent variable of the percentage of adultsmokers, is tested using an empirical model.

Theempirical model : % adult cigarette smokers = β0 + β1 X cigarette sales tax + β2 X median income + β3 X corn price + β4X numbers of case in lung cancer + ei

Withthis empirical model, we can derive model regression, estimates,heteroskedasticity and scatter plots for the data collected and, tosummarize, the output. Interpretations can then be made on what theanalysis represents and how it can be used to reduce the cases oflung cancer due to smoking cigarettes. The results can also help thegovernment regulatory bodies in determining ways in which they canefficiently control and contain cigarette-smoking in each of the 50states. It will help in preventing the growth of a smoking nation,with an eventual reduced mortality rate and an increased medical billper state.

Theempirical model connects to the foundational economic theory throughthe direct proportionality relationship between increased cigaretteconsumption and reduced tax prices. It also looks at the increase incigarette consumption with reduced corn prices, increased householdincome and reduced lung cancer death rates. This relationship can beconsidered econometric with the effect that increase or decrease ofcigarette consumption has on the economy. Some of the econometricproblems that are likely to occur include a reduced workforce due toincreased cases of lung cancer deaths. A statistical model andconsumer consumption models can also be estimated under the sameresearch. The linear functional form is selected from the study ofthe relationship of the data collected to cigarette consumptionrates.

Theresearch analyses the data appropriately, presenting it in acomprehensible format that is easy to interpret. The graphs orscatter plots, are the best form of representation of this kind ofinformation. It is because scatter plots can be easily read andunderstood by anyone, regardless of their level of education. Thegraphs display a lot of relevant information even, at first sight.They are also captivating to look at, unlike the complex regressionand estimates that are also produced by Stata. However, at the end ofit all, all these methods of data analysis are important in coming upwith a conclusion and appropriate recommendations.

Data Collected

Datawas collected on the various areas required to determine whethercigarette smoking can be reduced so as to evaluate and formulate theresearch. Proving these hypotheses as null or false was a processthat involved intensive research. Most of the data used was collectedfrom national statistics bodies and compared to data collected in theresearch. It was also necessary to visit various hospitals and lookinto relevant medical records with the consent of the patientsinvolved or their families. These visits were done by selected healthagencies. It was narrowed down to the cancer centers, andspecifically lung cancer, where there was a need to identify the maincause of the cancer in the patients. A smoking history of the patientwas necessary. They were informed of the reasons behind the researchand any questions they had were answered appropriately.Confidentiality was a key virtue throughout this research, and thenames of patients were not exposed in the report. No video recordingor photography was done on the patients or their families.

Datais available in some institutions that already did this research. Theyear used for the research was 2009, since the data for that year waswell compiled. Institutions that provided this data are the NationalCancer Institute, Statista, The US Census Bureau and the Center forDisease Control (CDC).

TheCDC provided information on the tax rate and its ever-increasingnature when related to cigarettes. The data shows that the taxationon cigarettes has greatly increased since the year 1990. The CDC(Center for Disease Control) also provided the data on the medianincome per household per state in each of the 50 states in the US.The data was compared to the influence that the income has oncigarette consumption and its effects on the human health. It wasalso an avenue to look out for new diseases that were popping up insmokers. The National Cancer Institute was helpful in providinginformation and data on the number of lung cancer cases that werecaused by the smoking of cigarettes in each state. Finally, the USCensus Bureau provided data on corn prices per state and how theyaffected the production cost of cigarettes.

Thedata collected was as represented in appendix for more informationplease see appendix A.

Table1: Data collected on percentage smokers, corn price, householdincome, and cigarette tax and lung cancer death rate in all the 50states

FromTable1 in appendix A, the highest percentage of adult smokers is inWest Virginia at 25.6%, and the lowest is in Utah at 9.8. The cornprice varies around the same median, with the highest prices being inWashington at 4.5 and the lowest in New Jersey, S. Dakota and N.Dakota at 3.4. Some states have no listed corn prices, probablybecause they do not produce corn. It was observed that the stateswithout corn had some of the highest tax on cigarettes. The householdincome is highest in New Hampshire at 70838 and lowest in Mississippiat 39370. Cigarette tax varies in the 50 states, with the highestbeing imposed in Rhode Island at 3.46, indicating that this place hasa very high number of smokers, and the tax rate intends to controltheir consumption. Big cities such as New York also have a relativelyhigh tax rate because they are busy and full of people. Such crowdedareas provide a big market for cigarette manufacturers. Expensivecigars are also sold in New York due to the big population of wealthybusiness men and women. The tax rate in Hawaii is also high. It canmean that there are a lot of smokers here too. The island is known tobe a holiday ground for many people, thus they come as tourists toenjoy themselves. Such people are bound to smoke once in a while asthey relax and have fun, thus the high tax rate. The lowest tax rateis in Missouri at 0.17. The area has very few smokers, and the lowtax rate encourages the purchase of cigarettes to increase theirdemand and eventual revenue for the producing and packagingcompanies. The lung cancer death rate is highest in Kentucky at 69.1and lowest in Utah at 20.1, where there are very few smokers. Itclearly shows that the number of smokers is directly proportional tothe lung cancer death rate.

Test and Results

Beforerunning the test I first summarize each variable, follow byregression, scatterplot, heteroskdasticity, and variance inflationfactor. For more test result information please read appendix C.

Crosssection data to be apply for cigarette consumption control aspercentage of adult smoking cigarette.

Independent variable

Estimate coefficient

Standard error

P-value

Corn price

-2.661414

1.542577

0.093

HH Income

-0.0001088

0.0000662

0.109

Cigarette tax

-0.2769752

0.571823

0.631

Lung cancer death rate

0.1551454

0.0538581

0.007

constant

27.62295

8.997173

0.004

Chi squared

3.68

p-value =0

Number of observation

50

Statawas used to analyze data from the table above, and the followingstatistics were derived from it. For more information of Stata dofile please read the appendix D.

Theregression analysis implies that there is a relationship between thedependent and independent variables. Thefour independent variables, which are the tax rate on cigarettes,median income per family, cancer related to smoking and the price ofcorn per state, all have an effect on the dependent variable of thepercentage of adult smokers.

Thestates with a percentage above 25% of adult smokers are three andhave a death rate of around 60 due to lung cancer caused by thesmoking of cigarettes. The state with a population of smokers at lessthan 10% has a death rate of 20 due to lung cancer brought about bythe smoking of cigarettes. It is a clear indication that people whosmoke less are at a lower risk of dying from lung cancer (Mausner,1974).

Thehighest percentage of smokers is in states with the lowest cornprices and lowest in states where corn is expensive. Corn is used inthe production of cigarettes.

Itmeans that its cost affects the cost of production of cigarettes, andthe eventual retail price of a cigarette (Cox, 1931).

Fromthe results analysis shown in appendix section, it can be concludedthat the percentage of cigarette smokers is affected by the medianhousehold income, the tax rate on cigarettes, the lung cancer deathrate and the price of corn in all the 50 states. The relationship isseen in the increase in the number of smokers with a low tax rate oncigarettes, a reduced lung cancer death rate, a low price of corn andlow household income. Similarly, an increased tax rate on cigarettes,decreased lung cancer death rate, an increased price of corn perstate, and high household income reduce the number of adult smokersin each state. With these statistics, the government can formulateways and means of controlling the rate at which people smokecigarettes and reduced the death rate due to lung cancer (McGrady,1955).

Theresearch was successful in testing the four hypotheses and achievingits objectives. It managed to prove that:

  1. An increase in cigarette sales tax will reduce the levels of cigarette consumption.

  2. The amount of income earned by a family directly influences the amount of cigarettes consumed by that family.

  3. The increase in corn prices will reduce the rate of cigarette consumption

  4. The increasing number of lung cancer patients will reduce cigarette consumption due to the effect of deterrent.

Furtherresearch can be conducted on the rate of cigarette smoking amongstudents and young people, and its effect on them (Healey, 2001).

Conclusion

Themost important findings are that smoking is rampant because of thelow taxes on this item. An increase in the taxes will reduce itsconsumption and also save majority of the population fromcigarette-induced. The research also concludes that the corn priceshave a direct effect on the pricing of cigarettes. The higher theprice of corn the more expensive the cigarettes become, and viceversa. It was also concluded that lung-cancer death rates can becontrolled by maintaining a low level of cigarette consumption.

Someof the problems encountered during the research include the aspect ofaddiction to smoking, which cannot be controlled by the pricing ofcigarettes. Smokers spends as much as they can to ensure they gettheir daily dose of cigarettes. Thus, including them in the researchdid not provide relevant information on the factors affecting therate of cigarette smoking.

References

Doerr,David, R. (1982). CigaretteTax Administrative Issues: A Source Book.Assembly Publications Office

Callison,K., Robert, K. (2012). DoHigher Tobacco Tax Rates Reduce Adult Smoking? New Evidence of TheEffect of Recent Tax Increases on Adult Smoking.National Bureau of Economic Research.

Kluger,R. (1996). Ashesto Ashes: America’s Hundred-Year Cigarette War, The Public Healthand the Unbashed Triumph of Philip Morris.Alfred A. Knopf

Rex,W. (1931).Factor Influencing Corn Prices.University Farm

Harry,F. (1919). Pricesof Corn and Corn Products. Govt.Print Office

Jack,A. (2008). LungCancer. Blackwell Publishers

Mausner,B., Ellen, S. (1974). ChangingAttitudes toward Cigarettes and Lung Cancer. BeaverCollege.

McGrady,P. (1955). Cigarettes= Lung Cancer?Public Affairs Committee

Healey,J. (2001).Smoking. SpinneyPress.

MinnesotaLegislature, Science and Technology Research Office (1980). LungCancer Uranium vs Cigarettes

AppendixA

Data:

State

Percent who smoke

Corn Price

HH Income

Cigarette tax

lung cancer Death rate

Alabama

22.5

4.15

45106

0.425

56.9

Alaska

20.6

66104

2

49.9

Arizona

16.1

4

50314

2

36.7

Arkansas

21.5

3.75

41240

1.15

61.1

California

12.9

4.35

60277

0.87

34.9

Colorado

17.1

3.85

63751

0.84

32.8

Connecticut

15.4

70469

2

40.6

Delaware

15.3

3.8

56834

1.15

52.3

Florida

18.3

4

48452

1.339

45

Georgia

17.1

3.6

48069

0.37

48.7

Hawaii

17.7

63168

2.6

33.1

Idaho

15.4

4.25

50779

0.57

37.7

Illinois

16.3

3.65

56422

0.98

48.6

Indiana

18.6

3.75

49312

0.995

54.5

Iowa

23.1

3.75

53958

1.36

46.7

Kansas

17.2

3.6

49918

0.79

47.3

Kentucky

17.8

3.75

44970

0.6

69.1

Louisiana

25.6

3.55

44762

0.36

56.5

Maine

17.3

51370

2

51.8

Maryland

15.5

4

69014

2

43.9

Massachusetts

15

65090

2.51

44.8

Michigan

19.6

3.6

51145

2

51.1

Minnesota

16.8

3.7

58829

1.504

39.7

Mississippi

23.3

3.7

39370

0.68

59.3

Missouri

23.1

3.65

50705

0.17

55.1

Montana

16.8

4.15

44878

1.7

47.6

Nebraska

16.7

3.7

55026

0.64

42.4

Nevada

22

56712

0.8

48.7

New Hampshire

15.8

70838

1.78

51.9

New Jersey

17.9

3.4

69630

2.7

41.4

New Mexico

18

4

47007

0.91

30.8

New York

18

3.95

54121

2.75

41

N. Carolina

20.3

3.85

46234

0.35

52.5

N. Dakota

18.6

3.4

54324

0.44

41.1

Ohio

20.3

3.7

49950

1.25

54.5

Oklahoma

25.5

3.8

48694

1.03

59.4

Oregon

17.9

4.1

54423

1.18

46

Pennsylvania

20.1

3.85

53234

1.35

47.5

Rhode Island

15.1

56381

3.46

48.1

S. Carolina

20.4

3.85

44936

0.07

51.9

S. Dakota

17.5

3.4

51463

1.53

47.1

Tennessee

22

3.65

42763

0.62

59.4

Texas

17.9

4.05

50856

1.41

42.7

Utah

9.8

4.35

63951

0.695

20.1

Vermont

17.1

57149

2.24

48.9

Virginia

19

3.75

65753

0.3

47.5

Washington

14.9

4.5

62319

2.025

44

West Virginia

25.6

3.55

43616

0.55

61.9

Wisconsin

18.8

3.7

55005

2.52

47.2

Wyoming

19.9

4.2

56877

0.6

38.4

AppendixB

Scatterplot results:

Percentageadult smoke V.S Lung cancer death rate

Percentageadult smoke cigarette V.S Corn Price

Percentageadult smoke cigarette V.S Household income

Percentadult smoke cigarette vs cigarette tax

AppendixC

Thetest result:

Summarize

summarize

Variable| Obs Mean Std. Dev. Min Max

-+

State|0

Percentwho~e| 50 18.5 3.217364 9.8 25.6

CornPrice| 41 3.837805 .2666413 3.4 4.5

HHIncome| 50 54111.36 8127.1733937070838

Cigarettetax| 50 1.28326 .7988413 .07 3.46

-+

lungcancer~e| 5047.202 8.989347 20.1 69.1

Regression

Heteroskdasticity

.estat hettest

Breusch-Pagan/ Cook-Weisberg test for heteroskedasticity

Ho:Constant variance

Variables:fitted values of Percentwhosmoke

chi2(1) = 3.68

Prob&gt chi2 =0.0552

Varianceinflation factor

AppendixD

StataDo file

summarize

regressPercentwhosmoke CornPrice HHIncome Cigarettetax lungcancerDeathrate

scatterPercentwhosmoke CornPrice

scatterPercentwhosmoke HHIncome

scatterPercentwhosmoke Cigarettetax

scatterPercentwhosmoke lungcancerDeathrate

correlatePercentwhosmoke CornPrice HHIncome Cigarettetax lungcancerDeathrate

regressPercentwhosmoke CornPrice HHIncome Cigarettetax lungcancerDeathrate

estathottest

regressPercentwhosmoke CornPrice HHIncome Cigarettetax lungcancerDeathrate

estatvif