UCL School of Management is delighted to welcome, Professor Hung Ho, Chicago Booth, to host a research seminar discussing: ’ Self-Control and Overconsumption: Empirical Evidence from Cigarette Purchases’.

Abstract:

Using transaction data from more than 10,000 smokers across 121 convenience stores, this study examines how consumers exercise self-control when purchasing vice goods. I exploit variation in exposure to multipack discounts (e.g., “buy 2, get $1 off”) and show that many smokers forgo these deals in favor of frequent single-pack trips. This pattern is specific to cigarettes: the same consumers redeem beverage multi-unit discounts at typical rates. Using an instrumental variable strategy, I find that buying an extra pack due to a discount causes smokers to increase daily smoking by 35%.

I then estimate a mixed-type model in which consumers are either (i) sophisticated, (ii) partially naive, or (iii) naive about their overconsumption risk, and find that roughly two-thirds show at least some awareness. Counterfactuals reveal that reintroducing a half-sized pack reduces consumption by 3.2%, while banning quantity discounts cuts it by less than 1%—a result corroborated by evidence from a real statewide discount ban in New York. These findings highlight how consumer self-control can inform more effective policies in vice markets.