Scandinavian Working Papers in Economics

HERO Online Working Paper Series,
University of Oslo, Health Economics Research Programme

No 2009:9: Did the ban on smoking reduce the revenue in pubs and restaurants in Norway?

Hans Olav Melberg () and Karl E. Lund ()
Additional contact information
Hans Olav Melberg: Institute of Health Management and Health Economics, Postal: P.O. Box 1089 Blindern, NO-0317 Oslo, Norway
Karl E. Lund: Norwegian Institute for Alcohol and Drug Research

Abstract: After 16 years of exemptions from the ban on indoor smoking in other places of work, Norway became the second country after Ireland to implement a smoke-free regime in pubs and restaurants. This paper evaluates the economic impact on the hospitality sector in a northern region with a cold climate. The data consists of bi-monthly observations of revenues in restaurants and pubs starting in January 1999 and ending in August 2007. Auto-regressive integrated moving average (ARIMA) intervention analysis was used to test for possible economic impacts, controlling for variations in temperature. The ban on smoking did not have a statistically significant effect on revenue in restaurants or on restaurant revenue as a share of personal consumption. There is also no evidence that the ban reduce revenues in bars, but there is some indication that it may have reduced bar revenue as a share of personal consumption. Conclusion: A large body of research has found no negative economic effect of smoke-free legislation on restaurant and bar sales in the United States, Australia and elsewhere Our study confirms these results in a northern region with a cold climate with respect to restaurants, but the results was more mixed for bars.

Keywords: Tobacco; economics; business; passive smoking; legislation

JEL-codes: D12; I18

15 pages, December 14, 2009

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