Descriptive Evaluation of the Leading Methodologies to Estimate the Sclae of Illicit Tobacco Trade

Abstract

The illicit tobacco trade is a large-scale worldwide phenomenon that can be associated with many negative consequences, such as criminal activity, lost tax revenues and higher prevalence of tobacco-related diseases. Customs authorities responsible for tackling illicit tobacco trade face the difficulties of monitoring and measuring the illicit tobacco market and mostly rely on the seizure data or studies funded by tobacco industry. To provide recommendations about an appropriate methodology to measure the scale of illicit trade, we performed qualitative descriptive evaluations of the two leading approaches: survey-based and trade discrepancy methods. We used the existing literature and basic economic identities to develop a straightforward economic accounting framework. Using this framework, we assess both methods and evaluate them against the criteria of reliability, validity, feasibility and country coverage. While the trade discrepancy approach has its strengths, we find that across these four criteria the survey-based approach performs better and should be preferred.