Impact of khat price increases on consumption behavior - price elasticity analysis

The long border of Saudi Arabia with Yemen is the primary route for khat entry to the Kingdom. As of April 2015, the government of SA tightened the border, making it more difficult to import khat into the country. As a result, local user prices of khat probably increased due in part to higher supply costs and perhaps lower quantities. One anti-drug strategy is to increase consumption cost by increasing the price of supply. We aim in this study to measure the responsiveness of khat demand to price changes.

This study used a cross-sectional survey design. Two stage sampling was used to recruit 350 khat chewers from four selected primary healthcare centers in Jazan province (South western province of Saudi Arabia). The data were collected during the first quarter of 2017. This study used both contingent valuation and revealed preference methods to assess the impact of price increases on the purchasing of khat. Graphical analysis, paired-samples t-test, and one-way repeated measures analysis of variance (ANOVA) were used to assess the impact of price increases on khat consumption.

The study results showed a significant decrease in khat consumption amount (t = 8.63, p ≤ 0.05), frequency (t = 30.42, p ≤ 0.05), and expenditure (t = 34.67, p ≤ 0.05) after the tightening of the Saudi-Yemeni border. Hence khat demand is price elastic. The price elasticity of khat demand in Jazan is estimated to be between - 2.38 and - 1.07. Therefore, each 1% increase in price is associated with 1-2% reduction in quantity demanded. This means khat chewers are relatively responsive to price changes (i.e., khat demand is price elastic). Repeated measures analysis of variance showed price increases significantly affect the quantity {F(4, 2.58) = 257, p ≤ 0.05, ηp² = 0.423} and frequency {F(4, 1.83) = 415, p ≤ 0.05, ηp² = 0.543} of khat chewing.

Increased prices for khat would significantly decrease demand. Accordingly, we recommend implementing law enforcement strategies focused on disrupting the khat supply chain to realize high prices and so discourage use, hence reducing the incidence of khat-related illnesses.