Price Elasticity Of Demand For Cigarettes Research Articles

Price elasticity of cigarette smoking in Bangladesh: evidence from the Global Adult Tobacco Surveys (GATS)

IntroductionThe overall prevalence of cigarette smoking has not changed significantly for over a decade in Bangladesh. Raising the price of cigarettes through taxation is an important policy instrument for reducing...

Cigarette prices and smoking among adults in eight sub-Saharan African countries: evidence from the Global Adult Tobacco Survey

BackgroundDespite growing concern over tobacco use in sub-Saharan Africa, evidence on the association between cigarette prices and adult smoking behaviour in the region is limited.ObjectivesTo provide new evidence on the...

Effect of cigarette prices on cigarette consumption in Ghana

IntroductionNoncommunicable diseases are on the rise globally, with tobacco consumption being a major risk factor. Reducing tobacco consumption is an important step towards reducing the incidence and prevalence of many noncommunicable diseases. Tax and price measures have been proposed as tobacco control tools. This study investigated the link between cigarette prices and cigarette consumption in Ghana. MethodsAnnual time series data for the period 1980–2016 were used. The data came from diverse sources, including WHO, World Bank, and tobacco industry documents. Dynamic Ordinary Least Squares (DOLS), cointegration techniques, and three-stage least squares (3SLS) were used to analyze the data. ResultsAfter controlling for education, income, and population growth, we estimated that the price elasticity of cigarette demand is between -0.35 and -0.52 and statistically significant at 1% level. In the short run, the price elasticity is -0.1. Another variable that significantly reduced cigarette consumption during the period was education, with an elasticity between -1.7 and -2.7. ConclusionCigarette demand in Ghana is influenced by cigarette prices and education. We conclude that tobacco taxes that significantly raise retail prices of cigarettes and higher education (including health education) will help reduce cigarette consumption.

Analyse macroéconomique de l’efficacité de la politique fiscale antitabac en Algérie

WHO advocates that financial and fiscal measures, aimed at making tobacco acquisition less affordable, are most effective, particularly in low- and middle-income countries. The objective is to analyze the application and effectiveness of the tobacco fiscal policy in Algeria in accordance with the provisions of the WHO Convention-Framework for Tobacco Control. Using macroeconomic data covering the period 1970-2018, we verified whether the levels, structure and evolution of tobacco taxes are oriented towards the implementation of a tobacco control tax policy. Then, we analyzed the conditions for the effectiveness of this policy and its viability through an econometric study of the price elasticity of cigarette demand, the income elasticity of cigarette demand, and the elasticity of affordable tobacco demand. We have shown that in Algeria, the tobacco control fiscal Policy is not applied, it is not effective in the long term, and the conditions for its viability are not met. The results of this study have led to question Article 6 of the WHO FCTC.

Impact of taxation policy on tobacco consumption in Saudi Arabia.

BACKGROUND: Taxes on tobacco products that increase the price and target demand-reduction have been shown to be an efficient means of reducing tobacco consumption. A new policy introduced in 2017 has increased the price of a 20-cigarette pack of the most popular brand to 27.50 SAR (7.33 USD) with the tax portion being 68.09%, which is within the yardstick recommended by the World Bank.OBJECTIVE: Assess impact of taxes on cigarette consumption.DESIGN: Retrospective econometric analysis.MAIN OUTCOMES MEASURES: The annual importation of cigarettes containing tobacco (commodity code 24022000) in metric tons (as a proxy measure of consumption).METHODS: An econometric analysis of cigarette prices and consumption was performed using the methods of the World Bank Economics of Tobacco Toolkit. The impact was assessed statistically through price elasticity of cigarette demand. The study used yearly data for the period 2013-2019 to compare the price elasticity of demand according to the change in price. Cigarette consumption was equated to cigarette imports (dependent variable), and correlation with the cigarette price, income, education, and unemployment was assessed as independent variables of interest.RESULTS: Annual importation of cigarettes declined by 27.41% for the period 2013-2019 after the imposition of ad valorem and value-added taxes in 2017 and 2018, respectively. The price of a pack of cigarettes increased by 115.1% from 2016 to 2018. The per capita consumption was inversely correlated with price *P=.0003285, r=-0.969). The inverse correlation between income and per capita consumption was also statistically significant (P=.025, r=-0.816). Education did not correlate with per capita consumption (P=.740, r=-0.155), but unemployment was inversely correlated (P=.008, r=-0.884). From 2016 to 2018, the price elasticity of demand became negative with respect to income as recommended by the World Health Organization. The price elasticity of demand reached -0.07, -0.8, -0.93 in 2016, 2017, 2018, respectively.CONCLUSION: The modification of tax policy in 2017 has resulted in a decrease in both cigarette affordability and consumption. An additional 42.67% increase in the price, or pack price of 35.81 SAR (9.54 USD) might offset the increase in individual income noted in 2019 and maintain the decreased affordability.LIMITATIONS: The lack of more granular data on cigarette sales and more reliable data on prevalence.CONFLICT OF INTEREST: None.

Social isolation: a key to explain a migrant worker cigarette smoking

Migrant workers in China are experiencing social isolation caused by institutional and non-institutional barriers. This paper explores the relationship between social isolation and migrants’ smoking behavior as well as gender differences in smoking. Migrants’ social isolation is systematically measured from the structural and qualitative perspective. Using the survey data of 2,188 rural-to-urban migrants in China in 2016, the prevalence of smoking among migrants is 38.21%, with 51.70% for males and 4.06% for females. Migrants with social isolation, such as migration instability, lack of ties with family and fellow migrants, and life dissatisfaction in migrant cities, are more likely to smoke and the impacts vary by gender. The income and price elasticities of cigarette demand show that male migrant smokers are more sensitive to income and price changes than female migrant smokers. Boosting rural migrants’ integration into the local community will reduce smoking prevalence, improving the overall health of the society.

Cigarette Prices and Smoking Behavior in Israel: Findings from a National Study of Adults (2002-2017).

Tobacco taxation and price policies are considered the most effective for lowering demand for tobacco products. While this statement is based on research from numerous countries, scant evidence exists on this topic for Israel. Accordingly, we assessed the association between cigarette prices and smoking prevalence and intensity from a national sample of adults in Israel (2002–2017). Data on smoking behavior were derived from the Israeli Knowledge Attitudes and Practices (KAP) survey, a repeated cross-sectional survey. Price information is from the Economist Intelligence Unit (EIU) since it was not collected in the KAP survey. We used the price of a pack of 20 cigarettes for Marlboro and the local brand. These two price variables were the primary independent variables, and we adjusted for inflation. The dependent variables were current smoking (yes/no) and smoking intensity, defined as the number of cigarettes smoked per week. Multivariable analysis was employed using a two-part model while adjusting for covariates. The first step of the model utilized logistic regression with current smoking as the dependent variable. The second step examining smoking intensity as the dependent variable, used OLS regression. Price elasticity was estimated as well. Analysis revealed that a one-unit increase (Israeli currency) in the price of local brand of cigarettes was related to 2.0% (OR = 0.98; 95%CI 0.98, 0.99) lower odds of being a current smoker, adjusting for covariates including household income. Moreover, a one unit increase in the price of the local brand of cigarettes was related to consuming 1.49 (95% CI −1.97, −1.00) fewer weekly cigarettes, controlling for household income and covariates. Similar results were found with the Marlboro cigarette prices. The total price elasticity of cigarette demand, given by the sum of price elasticities of smoking prevalence and intensity, showed that a 10.0% increase in the price is associated with a 4.6–9.2% lower cigarette consumption among Israeli adults. Thus, increasing cigarette prices will likely lead to a reduction in cigarette smoking thereby improving public health in Israel.

Estimating the price elasticity for cigarette and chewed tobacco in Pakistan: evidence from microlevel data

While there is a large literature on the magnitude of price elasticity of cigarette demand, less is known about the same for chewed tobacco. Moreover, the studies on cigarette demand in Pakistan tend to ignore the heterogeneity in the smoking behaviour. This study estimates price elasticity for cigarette and chewed tobacco demand across different income groups, provinces and regions; and use these coefficients for simulating Pakistan's tax policy and its impact on revenue and health outcomes. Deaton model was applied on the 2015-2016 Household Integrated Income and Consumption Survey dataset to estimate price elasticities of different tobacco products. The demand for cigarettes is unitary elastic (-1.06), suggesting that a 1% increase in cigarette price would reduce its consumption by 1.06%. On the other hand, the demand for chewed tobacco is relatively inelastic (-0.55). Provincially, the own-price elasticity of cigarettes is negative and significant for all but Kyber Pakhtunkhwa (KP) province; whereas that of the chewed tobacco is negative and significant only for KP and Balochistan. Besides, the price elasticity of demand for both tobacco products is negative and significant only for lower income group and the rural region. The tax simulations favour a two-tiered tax system over the existing three-tiered system as the former will bring significantly better tax revenue and health outcomes. While confirming the effectiveness of tax policies in curbing tobacco use, this study concludes that higher tobacco taxes could increase tax revenue and improve public health in Pakistan.

Determinants of smoking intensity in South Africa: Evidence from township communities.

In order to analyze the smoking patterns in economically disadvantaged communities in South Africa, this paper examines the determinants of smoking intensity, using pooled data on price and non-price determinants of smoking from two cross-sectional surveys conducted in 2017 and 2018 to investigate the drivers of conditional cigarette demand among daily smokers. The analysis was done using a negative binomial regression. The results show that smokers reduce the number of cigarettes smoked daily when cigarette prices increase. The conditional price elasticity of cigarette demand of −0.295 for the overall sample shows that a 10% increase in cigarette price leads to a 2.95% decline in cigarette consumption among smokers. For young smokers, a 10% increase in cigarette price causes their smoking intensity to fall by 5%. Similar to other studies, the response of female smokers to cigarette price changes is statistically insignificant. Other factors affecting the conditional demand for cigarettes are education, race, single stick sales, gender, wealth, and age. We conclude that cigarette prices play a significant role in reducing smoking intensity among the South African poor. Since the magnitude of the price effect varies across age groups, races, and genders, the policy of higher tobacco excise taxes should be accompanied by interventions targeted at those less responsive to price-related measures.

Price Elasticity of cigarette smoking demand in the Philippines after the 2012 Sin Tax Reform Act

The Philippine tobacco excise tax reform law passed in 2012 drastically increased cigarette prices which were historically low. A pack of 20 cigarettes costing nine cents (US Dollar) or less was taxed five cents in 2011. When the reform took effect in 2013, each pack was taxed 24 cents which is almost five times the 2011 rate. Alongside the increase in tax is a decline in the prevalence of tobacco use from 28.3% in 2009 to 23.8% in 2015. Seven years since the reform took effect, policymakers are still debating whether the tax introduced was high enough to significantly reduce smoking prevalence. This study estimated the total price elasticity of cigarette demand using regression analyses on the pooled Philippine 2009 and 2015 Global Adult Tobacco Survey data with the excise tax as an instrumental variable. Information from both tax regimes provided the variation in cigarette prices that allowed for the estimation of the price elasticity of smoking participation and intensity. Age, sex, urban residence, educational attainment, employment status, wealth quintile, and media exposure were used as control variables. Results confirm that cigarette demand is inelastic, given that total cigarette price elasticity of demand ranges from −0.56 to −1.10 which means that for every 10% price increase, total cigarette demand declines by 5.6% to 11.0%. This study also provides total price elasticities for different subpopulations. Future studies can use these elasticity estimates to forecast smoking prevalence and provide policy recommendations.

Prices and cross-border cigarette purchases in the EU: evidence from demand modelling

BackgroundPrevious studies of cross-border cigarette purchases in the European Union (EU) relied on survey-reported data. Results of those studies might be affected by under-reporting of tax avoidance in those surveys....

A generalized focused information criterion for GMM

SummaryThis paper proposes a criterion for simultaneous generalized method of moments model and moment selection: the generalized focused information criterion (GFIC). Rather than attempting to identify the “true” specification, the GFIC chooses from a set of potentially misspecified moment conditions and parameter restrictions to minimize the mean squared error (MSE) of a user‐specified target parameter. The intent of the GFIC is to formalize a situation common in applied practice. An applied researcher begins with a set of fairly weak “baseline” assumptions, assumed to be correct, and must decide whether to impose any of a number of stronger, more controversial “suspect” assumptions that yield parameter restrictions, additional moment conditions, or both. Provided that the baseline assumptions identify the model, we show how to construct an asymptotically unbiased estimator of the asymptotic MSE to select over these suspect assumptions: the GFIC. We go on to provide results for postselection inference and model averaging that can be applied both to the GFIC and various alternative selection criteria. To illustrate how our criterion can be used in practice, we specialize the GFIC to the problem of selecting over exogeneity assumptions and lag lengths in a dynamic panel model, and show that it performs well in simulations. We conclude by applying the GFIC to a dynamic panel data model for the price elasticity of cigarette demand.

Cigarette demand is responsive to higher prices: findings from a survey of University students in Jordan

ObjectiveTo estimate the price elasticity of cigarette demand for university students aged 18–24 years in Jordan.MethodsQuestions from the Global Adult Tobacco Survey were adapted and administered to students from 10...

Politique d'augmentation des taxes sur les cigarettes au Cameroun: Comment réaliser à la fois les objectifs de santé publique et de recettes fiscales

RésuméL'augmentation des taxes sur les produits du tabac est largement promue comme politique efficace pour enrayer le tabagisme. Toutefois, les craintes que cette politique pourrait faire baisser les recettes fiscales contribuent à ralentir sa mise en œuvre dans la plupart des pays en développement. Cet article examine le problème dans le cas du Cameroun, notamment en essayant de déterminer le niveau optimal des taxes sur les cigarettes. À l'aide des données d'enquête auprès des fumeurs, nous estimons l'élasticité‐prix de la consommation des cigarettes, et nous simulons les effets que des hausses hypothétiques des taxes frappant les cigarettes pourraient avoir sur la consommation et les recettes fiscales. Les résultats permettent de souligner comment les pouvoirs publics pourraient, à travers une hausse substantielle des taxes sur les cigarettes, réaliser à la fois des objectifs de santé publique et de recettes fiscales.

Dynamics of U.S. State Cigarette Consumption: Evidence from Panel Error Correction Modeling

This study uses state-level data for nearly four decades to study the dynamic demand for cigarettes, focusing especially on the long-run equilibrium relationship between cigarette consumption and its determinants as well as the short-run and long-run causal dynamics. We find the presence of cointegration with the long-run equilibrium, indicating the price elasticity of cigarette demand to be negative and inelastic, the income elasticity is positive and the border smuggling effects are significant, with substantial variations across individual states. Of the various smoking control policies considered, questions remain as to the effectiveness of aggregate anti-smoking initiatives that treat all states alike. Furthermore, the causal dynamics reveal bi-directional causality between cigarette consumption and its determinants. Some policy implications are discussed.

Exploring the Relationship Between Cigarette Prices and Smoking Among Adults: A Cross-Country Study of Low- and Middle-Income Nations

Evidence on the relationship between cigarette prices and adult smoking in low- and middle-income countries (LMICs) is relatively limited. This study offers new descriptive evidence on this relationship using data from a set of 13 LMICs. We use Global Adult Tobacco Survey (GATS) cross-country data from approximately 200,000 participants aged 15 and older. Estimates on the relationship between prices and adult smoking were obtained from logit models of smoking participation and ordinary least squares models of conditional cigarette demand. Higher prices were associated with lower demand across countries, in terms of both smoking prevalence and daily number of cigarettes smoked among smokers. Our estimates suggest that the total price elasticity of cigarette demand in LMICs is approximately -0.53. We find that higher socioeconomic status (SES), represented through wealth and education effects is associated with lower chance of smoking overall, but among existing smokers, it may be associated with a larger number of cigarettes smoked. After controlling for a set of individual demographic and country characteristics, cigarette prices retain a significant role in shaping cigarette demand across LMICs. Because higher SES is associated with a reduced chance of smoking overall but also with increased daily consumption among current smokers, optimal tobacco tax policies in LMICs may face an added need to accommodate to shifting SES structures within the populations of these countries.

Smokers' Strategic Responses to Sin Taxes: Evidence from Panel Data in Thailand

In addition to quitting and cutting consumption, smokers faced with higher cigarette prices may compensate in several ways that mute the health impact of cigarette taxes. This study examines three price avoidance strategies among adult male smokers in Thailand: trading down to a lower-priced brand, buying individual sticks of cigarettes instead of packs, and substituting roll-your-own tobacco for factory-manufactured cigarettes. Using two panels of microlevel data from the International Tobacco Control Southeast Asia Study, collected in 2005 and 2006, we estimate the effects of a substantial excise tax increase implemented throughout Thailand in December 2005. We present estimates of the marginal effects and price elasticities for each of five consumer behaviors. We find that, controlling for baseline smoking characteristics, sociodemographics, and policy variables, quitting is highly sensitive to changes in cigarette prices, but so are brand choice, stick-buying, and use of roll-your-own tobacco. Neglecting such strategic responses leads to overestimates of a sin tax's health impact, and neglecting product substitution distorts estimates of the price elasticity of cigarette demand. We discuss the implications for consumer welfare and several policies that mitigate the adverse impact of consumer responses.

The Economics of Tobacco Use in Jordan

We conducted an independent survey of tobacco use in Jordan following the methods and template of the Global Adult Tobacco Survey. Using data collected on cigarette use and cigarette prices, we estimated the price elasticity of cigarette demand in Jordan. We used a 2-part model of cigarette demand. In the first part, we estimate the impact of prices on the decision to smoke while controlling for individual demographic and environmental characteristics. Conditional on smoking, we then estimate the effect of price on the number of cigarettes smoked. The total price elasticity of cigarette demand in Jordan was estimated to be -0.6. Smoking among women was found to be relatively unresponsive to price (elasticity of -0.01), whereas smoking among men was much more responsive to price (elasticity of -0.81). The price elasticity estimates suggest that significant increases in tobacco taxes are likely to be effective in reducing smoking in Jordan, particularly smoking among men.

An economic analysis of tobacco elimination policies in Turkey

ObjectiveWe aim to evaluate the costs and benefits of various tobacco elimination policies, specifically, an immediate taxation option and eight tax-combined long-term cessation programs. MethodsWe combine demographic projections for the period 2012–2050 with incidence and mortality rates of four major cigarette related diseases, price elasticity of cigarette demand and unit costs of nonprice measures to reduce demand in order to estimate the net present discounted values of policy alternatives. ResultsThe tax-combined cessation programs yield lower net costs to households and the society when they phase out smoking earlier. However, immediate taxation option is found to be superior, for both households and the society, to all tax-combined cessation programs irrespective of the duration of intervention. While all policies are estimated to yield significant reductions in the expected number of smoking related diseases and deaths, a class-based 20-year intervention is found to be the most effective program. ConclusionsAlthough immediate taxation policy and tax-combined class-based 20-year intervention program emerge as the best tobacco elimination policies for the society, more research is needed on assessing the cost-effectiveness, applicability and social desirability of these alternatives and on designing additional policies to overcome their limitations.

Is youth smoking responsive to cigarette prices? Evidence from low- and middle-income countries

ObjectiveTo estimate the price elasticity of cigarette demand among youth in low- and middle-income countries (LMIC).DataThe Global Youth Tobacco Survey was used to obtain data on the smoking behaviour of...