The impact of restaurant smoking bans on dining out expenditures: Evidence from panel data

Many state and local governments in the United States have laws that prohibit smoking in restaurants to protect people from the harmful effects of secondhand tobacco smoke. The opponents of these laws have long argued that these laws may harm the restaurant industry by repelling customers who smoke on a regular basis. In this paper, using data from the confidential version of the Panel Study of Income Dynamics (PSID), we estimate the impact of restaurant smoking bans on dining out expenditures of smoking and nonsmoking households. We identify the impact of these bans by exploiting the substantial variation in the implementation of these bans across different cities, counties, and states. Our results indicate that although restaurant smoking bans are associated with a 15.115.1% decrease in dining out expenditures of smoking households, they increase the dining out expenditures of nonsmoking households by 8.68.6%. Since the majority of the U.S. population does not smoke, the aggregate impact of restaurant smoking bans on dining out expenditures is slightly positive but statistically insignificant. These results imply that restaurant smoking bans do not harm the restaurant industry.