The effectiveness of plain packaging in discouraging tobacco consumption in Australia

The removal of all branding and promotions from tobacco products, known as 'plain packaging', is intended to decrease tobacco consumption. Here we examine the effectiveness of Australia's plain packaging law, which coincided with a change in graphic and text health warnings, by using nationally indicative data 5 years post implementation. We measured the effect of the law on smoking prevalence, tobacco expenditure, expenditure intensity and quantity of tobacco consumed, using New Zealand as a control country in a difference-in-differences research design. We uncover a substitution effect that is robust to different specifications and control countries. In response to the policy, smokers switched from more expensive to cheaper cigarettes and reduced their overall tobacco expenditure and expenditure intensity. However, as smoking became less costly, smokers consumed more cigarettes. To discourage such substitution and to help the policy achieve its intended outcomes, policymakers should consider implementing auxiliary measures, such as taxes or price floors.