The effect of price on cigarette consumption among youth in Indonesia: Implications for tobacco tax policy

Abstract

AbstractThe study aimed to estimate cigarette price elasticity among youth in Indonesia. We used a two‐part model to estimate the impact of price on smoking participation and smoking intensity on smokers. Data were obtained from National Socioeconomic Survey or Survei Sosial Ekonomi Nasional 2015, 2016, 2017, 2019, and 2020. This study included males and females aged 15–24 years from all districts. We controlled for socioeconomic variables such as age, sex, education, working status, marital status, wealth quintile, place of residence, geographical region, and year of the survey. Price was negatively associated with cigarette consumption. The estimated total cigarette price elasticity was approximately −0.6740, meaning a 10% increase in price would reduce cigarette consumption by 6.74%. We also found that females were more sensitive to price change than males. This result indicated that the percentage change in demand for cigarettes among youth is less than the percentage change in price or inelastic. Therefore, a higher tariff and simpler tobacco tax structure is necessary to make cigarettes less affordable in Indonesia.