Estimating Demand and Cross-Price Elasticity for Very Low Nicotine Content (VLNC) Cigarettes Using a Simulated Demand
Megan R Tucker1, Murray Laugesen1,2, Randolph C Grace1
1University of Canterbury, Department of Psychology, Christchurch, New Zealand.
Introduction:
Very Low Nicotine Content (VLNC) cigarettes might be useful as part of a tobacco control strategy, but relatively little is known about their acceptability as substitutes for regular cigarettes. We compared subjective effects and demand for regular cigarettes and VLNC cigarettes, and estimated cross-price elasticity for VLNC cigarettes, using simulated demand tasks.
Method:
Forty New Zealand smokers sampled a VLNC cigarette and completed Cigarette Purchase Tasks to indicate their demand for regular cigarettes and VLNC cigarettes at a range of prices, and a cross-price task indicating how many regular cigarettes and VLNC cigarettes they would purchase at 0.5x, 1x, and 2x the current market price for regular cigarettes, assuming the price of VLNC cigarettes remained constant. They also rated the subjective effects of the VLNC cigarette and their usual-brand regular cigarettes.
Results:
Cross-price elasticity for VLNC cigarettes was estimated as 0.32 and was significantly positive, indicating that VLNC cigarettes are partially substitutable for regular cigarettes. VLNC cigarettes were rated as less satisfying and psychologically rewarding than regular cigarettes, but this was unrelated to demand or substitutability.
Conclusion:
VLNC cigarettes are potentially substitutable for regular cigarettes. Their availability may reduce tobacco consumption, nicotine intake and addiction; making it easier for smokers to quit.
Implications:
VLNC cigarettes share the behavioral and sensory components of smoking while delivering negligible levels of nicotine. Although smokers rated VLNCs as less satisfying than regular cigarettes, smokers said they would increase their consumption of VLNCs as the price of regular cigarettes increased, if VLNCs were available at a lower price. This suggests that VLNCs are partially substitutable for regular cigarettes. VLNCs can be part of an effective tobacco control strategy, by reducing nicotine dependence and improving health and financial outcomes for smokers.
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