An Hedonic Price Index for Premium Cigars

Abstract

Despite concerns over the adverse health effects of smoking, sales of premium cigars have increased greatly in the U.S. in recent years. This paper presents a hedonic price index for premium cigars. The data set consists of the characteristics of 380 cigars. Using ordinary least squares regression, price is regressed on length, thickness, quality, and dummy variables for country of origin. In general, cigars that are longer, thicker, of higher quality, and made in Cuba cost more. Ratios between predicted and actual prices reveal cigars that are of relatively good and poor values (L81, L13).