1. IFS Parental Income and Childrens Smoking Behaviour: Evidence from the British Household Panel Survey Andrew Leicester Laura Blow Frank Windmeijer

2. © Institute for Fiscal Studies, 2005 Child Smoking – targets Government target: Reduce proportion of children aged 11 – 15 who smoke regularly from 13% (1996) to 11% by 2005 and 9% by 2010 »Smoking Kills – A White Paper on Tobacco (1998)

3. © Institute for Fiscal Studies, 2005 Child Smoking - progress 2005 target 2010 target Source: Smoking, Drinking and Drug Use among Young People in England in 2004" (Department of Health)

4. © Institute for Fiscal Studies, 2005 Current evidence Tyas and Pederson (1998) –Literature review of determinants of youth smoking –Consider parental socioeconomic status and childrens personal income: Higher levels of parental socioeconomic variables, such as education and social class, have often been found to be inversely related to smoking status in adolescents … … young people with more spending money showed higher levels of smoking …

5. © Institute for Fiscal Studies, 2005 Further studies Soteriades and DiFranza (2003) –Study of Massachusetts teenagers –Controlling for childrens demographics and parental smoking, find: The risk of adolescent smoking increased by 28% with each step down in parental education, and by 30% for each step down in parental household income Conrad et al (1992) –Around ¼ of studies did not support an inverse relationship between parental SES and childrens smoking

6. © Institute for Fiscal Studies, 2005 Measuring effect of income How might parental income affect childrens smoking behaviour? –Higher incomes allow parents to buy circumstances conducive to lower smoking rates School, peer, neighbourhood effects? –But also allow greater consumption of all goods, including cigarettes Clear that relationship between parental income and youth smoking may be indirect Concern that we may not be able to fully observe these indirect channels

7. © Institute for Fiscal Studies, 2005 Innovations of our approach Exploit relatively under-used data from the British Youth Panel (BYP) and British Household Panel Survey (BHPS) A more direct assessment of the extent to which parental incomes are associated with youth smoking –Use sibling differences to assess possible causal effect of income on smoking –Strips out unobservable household effects that determine smoking and are correlated with income

8. © Institute for Fiscal Studies, 2005 Data British Household Panel Survey (BHPS) / British Youth Panel (BYP) –1994 to 2001 (waves 4 to 11) –BYP separate data for children aged 11 – 15 in BHPS –Data from BYP on childrens smoking and characteristics –Data from BHPS on family backgrounds, SES, income, smoking status of adults –Track children from BYP into BHPS up to age 18

9. © Institute for Fiscal Studies, 2005 Sample Sizes Number of observations Number of children Entire sample7,2882,467 Sibling sample1,951751 Sibling sample cases where we observe two or more siblings reaching the same age at different points in time Used in sibling difference analysis later

10. © Institute for Fiscal Studies, 2005 Smoking behaviour in the BYP Child a smoker if: –Responds with positive figure to question how many cigarettes did you smoke in the last seven days? or –Self-defines as someone who smokes but not every week BHPS question is direct yes/no

11. © Institute for Fiscal Studies, 2005 BYP evidence on youth smoking: over time

12. © Institute for Fiscal Studies, 2005 BYP evidence on youth smoking: by household income decile

13. © Institute for Fiscal Studies, 2005 Household income and youth smoking: models Simple probit for whether child smokes Models all condition on: year, age, gender, region, household composition, mothers age In addition: –Condition on household income quintile and then other family background characteristics

14. © Institute for Fiscal Studies, 2005 Results *** = significant at 1% level; ** = significant at 5% level Baseline smoking probability = 15.6% Basic SpecificationAdditional controls Household Income Quintile (Baseline = 4 th ) 1 2 3 5 Maternal Educational Attainment (Baseline = O Level) Higher Degree 1 st Degree Vocational A Level CSE None Adult Smoker?

15. © Institute for Fiscal Studies, 2005 Results *** = significant at 1% level; ** = significant at 5% level Baseline smoking probability = 15.6% Basic SpecificationAdditional controls Household Income Quintile (Baseline = 4 th ) 1+ 4.2%** 2+ 3.5% ** 3+ 0.5% 5- 0.3% Maternal Educational Attainment (Baseline = O Level) Higher Degree– 1 st Degree– Vocational– A Level– CSE– None– Adult Smoker?–

16. © Institute for Fiscal Studies, 2005 Results *** = significant at 1% level; ** = significant at 5% level Baseline smoking probability = 15.6% Basic SpecificationAdditional controls Household Income Quintile (Baseline = 4 th ) 1+ 4.2%**+ 2.0% 2+ 3.5% **+ 1.5% 3+ 0.5%- 0.3% 5 + 1.5% Maternal Educational Attainment (Baseline = O Level) Higher Degree–+ 4.1% 1 st Degree–- 2.6% Vocational–- 4.1% A Level–- 0.5% CSE–+ 1.7% None–+ 3.5% ** Adult Smoker?–+ 8.5% ***

17. © Institute for Fiscal Studies, 2005 Sibling Differences Income correlated with observable features of the data, e.g. maternal education May also be correlated with unobservable features of the data – peer effects, neighbourhood effects, household preferences, etc. Therefore examine relationship between changes in income over time and changes in sibling smoking behaviour

18. © Institute for Fiscal Studies, 2005 Sibling Differences Focus on siblings who reach same age at different points in time 1,030 pairs of siblings identified Smoker Non- Smoker Smoker5999 Non- Smoker 73799 Older Sibling Younger Sibling

19. © Institute for Fiscal Studies, 2005 Model Define S = 0 if both siblings smoke/dont = 1 if only younger smokes = -1 if only older smokes S = f(Y, year, age, sex, sex, mother age, age gap between siblings) NB Y positive if household income rose by the time younger sibling reached same age as older

20. © Institute for Fiscal Studies, 2005 Results OLSIV Coefficient on Y Robust Std. Error Significant?

21. © Institute for Fiscal Studies, 2005 Results OLSIV Coefficient on Y 0.041 Robust Std. Error 0.024 Significant?10% level

22. © Institute for Fiscal Studies, 2005 Results OLSIV Coefficient on Y 0.0410.134 Robust Std. Error 0.0240.092 Significant?10% levelNo

23. © Institute for Fiscal Studies, 2005 Conclusions Inverse relationship between household income and youth smoking Effect fades once we control for maternal education and presence of adult smoker Sibling difference results suggest no direct causal relationship between household income and youth smoking If anything, higher incomes increase the likelihood of children smoking slightly