scholarly journals Price, Income, and Affordability as the Determinants of Tobacco Consumption: A Practitioner’s Guide to Tobacco Taxation

2020 ◽  
Author(s):  
Nigar Nargis ◽  
Michal Stoklosa ◽  
Ce Shang ◽  
Jeffrey Drope
Keyword(s):  
Price Elasticity ◽  
Tobacco Consumption ◽  
High Income ◽  
Cigarette Consumption ◽  
Tobacco Products ◽  
Middle Income ◽  
Middle Income Countries ◽  
Price Increases ◽  
Tobacco Tax ◽  
Tobacco Taxation

Abstract Introduction Tobacco product prices and consumers’ income are the two major economic determinants of tobacco demand. The affordability of tobacco products is dependent on the price of tobacco products relative to consumer income. Increase in tobacco tax is expected to lead to higher price, lower affordability, and reduced consumption. Price elasticity and affordability elasticity are used in analyzing the effect of tobacco tax increases on tobacco consumption and public health. The availability of both parameters raises the question of which one to apply in policy discussions. Aims and Methods Using global data on cigarette consumption, price, income, and tobacco control measures for 169 countries over 2007–2016, this study estimated the price elasticity and affordability elasticity of cigarette consumption by country income classification using country-specific fixed effects model for panel data. Results The estimates show that the restriction of equal strength of the effects of price and income changes on tobacco consumption maintained in affordability elasticity estimation is valid for low- and middle-income countries, while it is rejected for high-income countries. Conclusions Affordability elasticity may prove to be a useful parameter to explain and predict the sensitivity of consumers to tobacco tax and price policy changes under conditions of robust economic growth, which are more likely to be observed in countries with initial low- or middle-income setting. It can provide a reasonable benchmark for tobacco tax and price increase necessary to effectively reduce affordability and consumption of tobacco, which can form a basis for building systematic tax and price increases into the tobacco tax policy mechanism. Implications Price elasticity measures the sensitivity of consumers to changes in real prices, holding real income constant. Affordability elasticity measures the sensitivity of consumers to price changes adjusted for inflation and income changes. Existing scientific literature on tobacco demand abounds in both price and affordability elasticity estimates, without providing a clear explanation of the theoretical and policy implications of using one parameter over the other. By estimating and comparing price and affordability elasticities for high-income and low-and-middle-income countries separately, this article offers a guide to the practitioners in tobacco taxation for evaluating the effectiveness of tax-induced price increases on tobacco consumption.

scholarly journals Tobacco price elasticity in Serbia: evidence from a middle-income country with high prevalence and low tobacco prices

2020 ◽  
Vol 29 (Suppl 5) ◽  
pp. s331-s336 ◽  
Author(s):  
Marko Vladisavljevic ◽  
Jovan Zubović ◽  
Mihajlo Đukić ◽  
Olivera Jovanović
Keyword(s):  
Price Elasticity ◽  
Low Income ◽  
Tobacco Consumption ◽  
Reliable Estimate ◽  
Demand Model ◽  
Middle Income ◽  
Middle Income Countries ◽  
Tobacco Taxes ◽  
Tobacco Tax ◽  
High Prevalence

In this paper, we use Deaton’s demand model and Household Budget Survey data from 2006 to 2017 to provide a first robust and reliable estimate of cigarettes price elasticity for Serbia. The case of Serbia is particularly interesting and important as it provides evidence for a country in which tobacco market is characterised by the high tobacco consumption, low prices and large perceived impact of multinational tobacco companies on public revenues, export and employment, given their considerable cigarette production in Serbia. The price elasticity of cigarettes is estimated at −0.639, in line with the previous estimates for the low-income and middle-income countries. Estimated negative cigarettes price elasticity for Serbia suggests that tobacco tax policy could be used effectively to reduce cigarette consumption in Serbia, which could lower the harmful health effects of cigarettes. Furthermore, a calculation based on the estimated elasticity suggests that increasing tobacco taxes could also have positive fiscal effects, as the expected revenue from the taxes would increase.

Price and expenditure elasticity of cigarette demand in El Salvador: a household-level analysis and simulation of a tax increase

2020 ◽  
pp. tobaccocontrol-2019-055568
Author(s):  
Guillermo Paraje ◽  
Daniel Araya ◽  
Adonay De Paz ◽  
Nigar Nargis
Keyword(s):  
El Salvador ◽  
Total Population ◽  
Tobacco Consumption ◽  
Cigarette Consumption ◽  
Tax Revenue ◽  
Middle Income ◽  
Household Level ◽  
Price Increases ◽  
Tobacco Tax ◽  
Expenditure Elasticity

BackgroundIn El Salvador, 8.8% of adults 15 years and older smoke cigarettes. Little is known about the sensitivity of cigarette consumption among the adults in El Salvador to tax and price increases and income growth.MethodsElasticities are estimated using Deaton’s Almost Ideal Demand System model applied to data from the National Household Income and Expenditure Survey 2005/2006 for the total population and separately for income groups. The estimates are then used to simulate the effects of a proposed change in tobacco tax policy on cigarette consumption and tax revenue.FindingsThe estimated price elasticities (−0.77 for the total population) are within the range of price elasticity estimates available for low and middle-income countries. Given the estimated elasticities, a tobacco tax increase is expected to reduce the number of smokers (by almost 20%) and increase tobacco tax revenue (by more than 50%).ConclusionsIncreasing tobacco taxes has the potential to decrease consumption in El Salvador and raise fiscal revenues. The tobacco tax burden in El Salvador is one of the lowest in Latin America and the social costs of tobacco consumption largely exceed the tobacco tax revenues. An increase in tobacco tax could significantly decrease the number of smokers and reduce the burden of tobacco-related diseases and deaths.

scholarly journals Analysis of Tobacco Price Elasticity in Albania Using Household Level Data

2020 ◽  
Vol 17 (2) ◽  
pp. 432 ◽  
Author(s):  
Aida Gjika ◽  
Edvin Zhllima ◽  
Klodjan Rama ◽  
Drini Imami
Keyword(s):  
Price Elasticity ◽  
Tobacco Consumption ◽  
Living Standard ◽  
Demand Model ◽  
Middle Income ◽  
Female Ratio ◽  
Household Level ◽  
Middle Income Countries ◽  
Level Data ◽  
Quality Choice

This paper analyzes the determinant factors of tobacco consumption in Albania, which is one of the countries with the highest smoking prevalence in Europe. To empirically estimate the elasticity of cigarettes demand in Albania, the paper uses the Living Standard Measurement Survey (LSMS) applying Deaton’s (1988) demand model. This paper estimates an Almost Ideal Demand System (AIDS), which allows disentangling quality choice from exogenous price variations using unit values from cigarette consumption. Following Deaton’s model, the results suggest that the demand for tobacco is inelastic, with a price elasticity of −0.57. The price elasticity appears to be within the range of elasticity estimates frequently reported for low- and middle-income countries. The results suggest that total expenditure, household size, male-to-female ratio, and adult ratio are important determinants of tobacco demand in Albania. The increase in the tobacco price, which has been mainly driven by increased excises, has demonstrated a significant impact on reducing tobacco consumption. Consequently, the Albanian government may engage in gradual increases in excise taxes given the inelastic tobacco demand.

scholarly journals Illicit tobacco trade in Georgia: prevalence and perceptions

2019 ◽  
Vol 29 (Suppl 4) ◽  
pp. s227-s233 ◽  
Author(s):  
Megan Little ◽  
Hana Ross ◽  
George Bakhturidze ◽  
Iago Kachkachishvili
Keyword(s):  
Low Income ◽  
Household Survey ◽  
Tobacco Consumption ◽  
Middle Income ◽  
Middle Income Countries ◽  
Tobacco Taxes ◽  
Tobacco Tax ◽  
Illicit Tobacco Trade ◽  
Multistage Sampling ◽  
Cigarette Packs

BackgroundIn lower-income and middle-income countries, limited research exists on illicit tobacco trade and its responsiveness to taxation. Tobacco taxes are critical in reducing tobacco consumption, thereby improving public health. However, the tobacco industry claims that tax increases will increase illicit tobacco trade. Therefore, research evidence on the size of the illicit cigarette market is needed in Georgia and other low-income and middle-income countries to inform tobacco tax policies.MethodsIn 2017, a household survey using stratified multistage sampling was conducted in Georgia with 2997 smokers, to assess illicit tobacco consumption. Smokers were asked to show available cigarette packs to the surveyors. These were examined for tax stamps and health warnings which allowed for an assessment of illegal cigarette consumption in Georgia.FindingsThe packs shown to surveyors suggest illicit cigarette trade is low (1.5%), although with regional differences, as illicit cigarette packs were present in 6% of the households in Zugdidi. Most illicit cigarettes were purchased at kiosks or informal outlets. This estimate might be conservative, as 28% of respondents did not show any packs to the surveyors.ConclusionsDespite recent tobacco tax increases, illicit cigarette trade in Georgia seems to be negligible. The market is more vulnerable to illicit cigarette trade close to the border with Abkhazia (near Zugdidi). Tighter control or ban of tobacco sales at kiosks and informal outlets may reduce illicit cigarette trade. Further investigation is planned to better understand why a large proportion of survey participants said they had no pack available at home.

Tobacco

2021 ◽  
pp. 319-336
Author(s):  
Tai Hing Lam ◽  
Sai Yin Ho
Keyword(s):  
Public Health Problem ◽  
Public Places ◽  
Tobacco Products ◽  
Middle Income ◽  
Tobacco Advertising ◽  
Middle Income Countries ◽  
Pictorial Warnings ◽  
Tobacco Tax ◽  
Retail Outlets ◽  
Promote Smoking Cessation

Tobacco is the most important and avoidable public health problem, killing 5.4 million users per year. At least one in two and up to two in three smokers die prematurely from smoking. Such great and easily understood risks should be more effectively communicated to promote smoking cessation. This chapter describes how raising tobacco tax, banning smoking in public places, and forbidding tobacco advertising, promotion, and sponsorship have effectively reduced smoking rates in many countries. However, many low- and middle-income countries still lack the necessary resources or political will to implement tobacco control. Further progress may come from large and effective pictorial warnings; banning the display of tobacco products at retail outlets; extending smoking bans in public places; innovative use of the mass media; very brief warnings by doctors to promote cessation; telephone quitlines; and capitalizing on the risk perception towards third-hand smoke.

scholarly journals Adherence to Food-Based Dietary Guidelines: A Systemic Review of High-Income and Low- and Middle-Income Countries

Nutrients ◽  
2021 ◽  
Vol 13 (3) ◽  
pp. 1038
Author(s):  
Ana Carolina B. Leme ◽  
Sophia Hou ◽  
Regina Mara Fisberg ◽  
Mauro Fisberg ◽  
Jess Haines
Keyword(s):  
English Language ◽  
Economic Status ◽  
High Income ◽  
Dietary Guidelines ◽  
Systemic Review ◽  
Healthy Children ◽  
Future Health ◽  
Middle Income ◽  
Middle Income Countries ◽  
Low And Middle Income

Research comparing the adherence to food-based dietary guidelines (FBDGs) across countries with different socio-economic status is lacking, which may be a concern for developing nutrition policies. The aim was to report on the adherence to FBDGs in high-income (HIC) and low-and-middle-income countries (LMIC). A systematic review with searches in six databases was performed up to June 2020. English language articles were included if they investigated a population of healthy children and adults (7–65 years), using an observational or experimental design evaluating adherence to national FBDGs. Findings indicate that almost 40% of populations in both HIC and LMIC do not adhere to their national FBDGs. Fruit and vegetables (FV) were most adhered to and the prevalence of adhering FV guidelines was between 7% to 67.3%. HIC have higher consumption of discretionary foods, while results were mixed for LMIC. Grains and dairy were consumed below recommendations in both HIC and LMIC. Consumption of animal proteins (>30%), particularly red meat, exceeded the recommendations. Individuals from HIC and LMIC may be falling short of at least one dietary recommendation from their country’s guidelines. Future health policies, behavioral-change strategies, and dietary guidelines may consider these results in their development.

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