On the (mis)use of cross-price effects to gauge the effectiveness of smokeless tobacco in smoking cessation

Abstract

In a recent edition of this journal Mikael Bask and Maria Melkersson suggested that moist snuff, snus to the Swedes, is not an effective tool in cigarette smoking cessation. The sole basis for this conclusion is their empirical findings concerning the cross-price elasticity of demand between cigarettes and snus. Specifically, they find that, “The cross-price elasticities are negative, which indicates that snus contributes to increased smoking. Thus, even if snus taking is less harmful than cigarette smoking, it is not advisable to encourage its use in smoking cessation programs.” We find this conclusion to be unwarranted. It is based on a model estimated with inappropriate data; it is based on a misspecified model with questionable theoretical underpinnings; and no evidence is presented as to the statistical significance of the cross-price effects. Furthermore, even if we ignore these technical criticisms, their conclusions are unfounded because they are based on an inappropriate conceptual experiment. We first address some technical problems with the Bask and Melkersson analysis, and then we address the fundamental flaw in their reasoning