Self-Control and Overconsumption: Empirical Evidence from Cigarette Purchases

Using transaction data from more than 10,000 smokers across 121 convenience stores, this study ex-
amines 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 multi-unit
discounts of other products 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 structural model that allows smokers to differ in their overconsumption risk and awareness of that risk.
I find that most smokers are prone to overconsume, and about two-thirds are at least partially aware of this
risk. Counterfactuals show that reintroducing a half-sized pack reduces consumption by about 2% when
priced at 80% of the standard pack and by up to 4.5% when priced at 60%. By contrast, the model predicts
that banning quantity discounts would reduce consumption by less than 1%, consistent with evidence from
New York’s statewide discount ban.