Advertising, Habit Formation, and U.S. Tobacco Product Demand

Yuqing Zheng, Chen Zhen, James Nonnemaker, Daniel Dench

Research output: Contribution to journalArticlepeer-review

31 Scopus citations


The U.S. tobacco market has experienced a shift toward noncigarette tobacco products. We examined the degree of habit formation and the role of advertising for cigarettes, little cigars/cigarillos, large cigars, e-cigarettes, and smokeless tobacco using market-level scanner data for convenience stores from 2009 to 2013. Results based on a dynamic demand system show that while all tobacco products are habitual, e-cigarettes are the most habitual product. More choices of flavors, less restrictions on its use in public places, less documented harmful effects, and a higher upfront cost might explain the higher degree of habit formation for e-cigarettes. We also find that e-cigarettes did not substitute for or complement cigarettes. The results imply that e-cigarettes may serve as a gateway to nicotine addiction but not necessarily to cigarette smoking. Regarding advertising, cigarette magazine advertising did not affect cigarette demand, while e-cigarette TV advertising increased e-cigarette demand with a positive spillover to cigarette demand. Such results may help explain e-cigarettes' recent success in sales and imply that e-cigarette TV advertising might undermine efforts to reduce cigarette smoking. Advertising was also found to affect the degree of habit formation for cigarettes, large cigars, and e-cigarettes.

Original languageEnglish
Pages (from-to)1038-1054
Number of pages17
JournalAmerican Journal of Agricultural Economics
Issue number4
StatePublished - Jul 1 2016

Bibliographical note

Publisher Copyright:
© 2016 The Authors.


  • Advertising
  • cigar
  • cigarette
  • cigarillo
  • e-cigarette
  • electronic cigarette
  • electronic nicotine delivery system
  • habit formation
  • smokeless tobacco

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics


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