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The association between cigarette affordability and consumption: An update.
Yanyun He1, Ce Shang2, Frank J Chaloupka1,2
1Department of Economics, University of Illinois at Chicago, Chicago, Illinois, United States of America.
Plos One
|December 6, 2018
Summary
Cigarette affordability, measured by the Relative Income Price (RIP) ratio, declined globally, especially in low-income nations, correlating with increased smoking. Raising cigarette prices is crucial for low- and middle-income countries to curb tobacco use.
Area of Science:
- Public Health
- Health Economics
- Tobacco Control
Background:
- Cigarette affordability significantly impacts tobacco consumption globally.
- Understanding the relationship between income, cigarette prices, and consumption is vital for public health interventions.
- Economic growth can inadvertently increase cigarette affordability, potentially driving higher smoking rates.
Purpose of the Study:
- To calculate cigarette affordability worldwide using the Relative Income Price (RIP) ratio from 2001-2014.
- To examine the association between cigarette affordability and per capita cigarette consumption.
- To determine the affordability elasticity of demand for cigarettes across different income economies.
Main Methods:
- Calculated the Relative Income Price (RIP) ratio for 78 countries (2001-2014), representing the percentage of per capita GDP needed to buy 100 cigarette packs.
- Utilized Ordinary Least Squares (OLS) regression to analyze the relationship between RIP and cigarette consumption.
- Differentiated analysis across low-income, lower-middle-income, upper-middle-income, and high-income economies.
Main Results:
- Cigarette affordability (declining RIP) increased in low- and lower-middle-income countries, coinciding with rising per capita consumption.
- Real cigarette prices declined in low- and lower-middle-income countries but rose in upper-middle- and high-income countries.
- A 10% increase in RIP led to a 2% decrease in per capita consumption, with significant differences in affordability elasticity between high-income and low-/middle-income countries.
Conclusions:
- Low- and lower-middle-income countries must implement price increases exceeding economic growth and inflation to reduce cigarette affordability and curb smoking.
- Sustained tobacco control efforts require policies that counteract the effects of rising incomes on cigarette affordability.
- The study highlights the need for targeted price policies to effectively reduce tobacco use globally.
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