Unintended Consequences of Antismoking Pricing Policies: Insights from Smokers’ Household Expenditure on Smoking Behavior and Public Health

Abstract

Despite e-cigarettes’ increasing popularity, traditional cigarette smoking, particularly with roll-your-own (RYO) tobacco, persists as the predominant form of global tobacco consumption. We examine the effect of an antismoking pricing policy on smokers’ behavior by assessing changes in their households’ consumption of tobacco products. To do so, we use a pricing policy implemented in Israel that introduced significant tax increases on RYO tobacco and factory-made cigarettes as our research setting. We analyze data compiled by a national agency on 8000 households representing the smoking population, evaluating changes in smoking behavior through their expenditures on tobacco products. Our model assesses the policy’s impact on tobacco and cigarettes consumed, as well as the probability of households consuming these products. We find that the policy reduced neither overall tobacco consumption nor cigarettes smoked, contrary to expectations. Instead, it was associated with an increased likelihood of households choosing RYO cigarettes and the number of RYO cigarettes consumed. The study emphasizes that anti-smoking pricing policies may inadvertently promote RYO tobacco use, potentially harming public health. To mitigate this, we recommend designing price policies that eliminate perceived gaps between RYO tobacco and factory-made cigarettes. This approach can discourage substitution and foster the deconsumption of both products.