Intensity Matters: Heterogeneous impact of cigarette tax reform on drinking behaviors by smoking intensity

This paper investigates the relationship between smoking and drinking behaviors across different smoking intensity groups, using a unique policy shock that increased cigarette taxes in South Korea. Using the Korean Health Panel, we employ a difference-in-differences approach to estimate the causal effect of the cigarette price increase on alcohol consumption among heavy, average, and light smokers. We find that an increase in cigarette prices reduces drinking behavior only among heavy smokers, while cigarette consumption is reduced across all smokers. Subgroup analysis shows that the reduction in alcohol use among heavy smokers is more pronounced in the elderly, low-income, and moderately educated groups. These findings suggest that the public health benefits of cigarette taxes extend beyond their impact on smoking, particularly for those who are more vulnerable to the adverse health consequences of tobacco and alcohol.