Understanding Heterogeneous Effects of Health Policies Using a Gene-Environment Interaction Framework

This paper describes how using a gene-environment interaction framework may allow us to understand why health policies often work on some people but not others. A motivating example focuses on tobacco taxation policies in the US. The reduction in tobacco use as a result of taxation has been considered one of the most important public health successes in the past century. However, individuals continue to smoke at high rates and there is evidence of substantial heterogeneity in the responses to taxation. One of the key determinants of tobacco use is genetic susceptibility, yet important policies to reduce tobacco use have not successfully merged this risk factor in targeting interventions. I extend the standard economic framework that has evaluated tobacco taxation effects by presenting the first evidence in the literature that specific genetic polymorphisms moderate the effects of taxation on tobacco consumption. The evidence suggests that taxation only affects smoking participation decisions of individuals with a specific genotype¿a polymorphism of a nicotinic receptor gene¿and has no effect on others.