The association between cigarette affordability and consumption: An update.

Yanyun He,Ce Shang,Frank J Chaloupka,Muhammad Jami Husain

doi:10.1371/journal.pone.0200665

Abstract

ObjectivesThis study calculates cigarette affordability for 78 countries worldwide from 2001 to 2014 using the Relative Income Price (RIP) ratio defined as the percentage of per capita GDP required to purchase 100 packs of cigarettes using the lowest price from Economist Intelligence Unit (EIU) database, examine the association between cigarette affordability and cigarette consumption, and calculate the affordability elasticity of demand.Design and methodsRIP (2001–2014) was calculated for 16 low-income economies, 19 lower middle-income economies, 13 upper middle-income economies, and 30 high-income economies. Ordinary least square regressions were used to analyze the association between cigarette affordability and consumption.ResultsPer capita consumption continued to rise in low-income countries and decreased slightly in lower middle-income countries as the RIP of cigarette consistently declined in low- and lower middle-income economies from 2001 to 2014. The real cigarette prices continued to decline in low- and lower middle-income countries and continued to rise in upper middle- and high-income countries. Though cigarettes were more expensive in HICs than were in LMICs, cigarettes were more affordable in HICs than were in LMICs. The regression results show a 10% increase in the RIP of cigarettes led to a 2% decrease in per capita consumption. The affordability elasticity of demand differed significantly between HICs and LMICs. However, the effect of cigarette affordability on consumption has not changed over time.ConclusionsTo control the smoking epidemic, low- and lower middle-income countries should further increase cigarette prices. The rate of price increase should exceed the rate of economic growth and outpace the inflation rate to make cigarettes less affordable and thereby reducing tobacco use.

Highlights

Numerous studies have shown that an increase in cigarette prices decreases cigarette consumption,[1,2,3] decreases smoking initiation, and increases quitting.[4,5,6,7,8] The main goal of increasing cigarette taxes, which results in higher cigarette prices, is to make cigarettes less affordable and thereby reducing the demand for cigarettes
Per capita consumption continued to rise in low-income countries and decreased slightly in lower middle-income countries as the Relative Income Price (RIP) of cigarette consistently declined in low- and lower middle-income economies from 2001 to 2014
The real cigarette prices continued to decline in low- and lower middle-income countries and continued to rise in upper middleand high-income countries

Summary

Introduction

Numerous studies have shown that an increase in cigarette prices decreases cigarette consumption,[1,2,3] decreases smoking initiation, and increases quitting.[4,5,6,7,8] The main goal of increasing cigarette taxes, which results in higher cigarette prices, is to make cigarettes less affordable and thereby reducing the demand for cigarettes. Rather than the price of cigarettes alone, is a key determinant of the demand for cigarettes because the increase in income may erode the effects of taxes or prices by making cigarettes more affordable. This has happened to many low- and middle-income countries (LMICs) since 1990s and marked a major tobacco control failure.[9, 10] examining the effect of cigarette affordability, rather than just price, on cigarette consumption can provide us more insights into the demand for cigarettes. The analysis of the trend in cigarette affordability in a specific country is of great importance as it can advise policy makers whether the cigarette affordability has caught up with the pace of economic growth and whether there is room for further increase in cigarette prices through taxation. The crosscountry comparison can inform policy makers how cigarette affordability in a specific country compared to other countries in the world

Objectives

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Results