Who is afraid of the big bad ban? An evaluation of the effects of the Spanish clean air law on expenditure at hospitality venues

Garcia Villar, Jaume, 1956-; López-Nicolás, Ángel

Who is afraid of the big bad ban? An evaluation of the effects of the Spanish clean air law on expenditure at hospitality venues

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Forthcoming in European Journal of Health Economics

Abstract

Background: In January 2011 Spain modified clean air legislation in force since 2006, removing all existing exceptions applicable to hospitality venues. Although this legal reform was backed by all political parties with parliamentary representation, the government s initiative was contested by the tobacco industry and its allies in the hospitality industry. One of the most voiced arguments against the reform was its potentially disruptive effect on the revenue of hospitality venues. This paper evaluates the impact of this reform on household expenditure at restaurants and bars and cafeterias. Methods and empirical strategy: We use household expenditure micro-data for years 2006 to 2012 to estimate models for the probability of observing expenditures and the expected level of expenditure. We apply a beforeafter analysis with a wide range of controls for confounding factors and a flexible modeling of time effects in order to identify the effects of the reform. Results: Our results suggest that the reform caused a 2% reduction in the proportion of households containing smokers but did not cause reductions in households expenditures on restaurant services or on bars and cafeteria services.