State-Level Affordability of Factory-Made Cigarettes among Current US Smokers: Findings from the ITC US Survey, 2003-2015.
ABSTRACT: Cigarette affordability measures the price smokers pay for cigarettes in relation to their incomes. Affordability can be measured using the relative income price of cigarettes (RIP), or the price smokers pay to purchase 100 packs of 20 cigarettes divided by their per capita household income. Using longitudinal data from 7046 smokers participating in the International Tobacco Control (ITC) US Survey, the purpose of this study was to test whether affordability significantly changed following the US federal tax increase implemented on 1 April 2009. This study also estimated temporal trends in affordability from 2003-2015 at state and national levels using small area estimation methods and segmented linear mixed effects regression models. RIP increased slightly during 2003-2008. This was followed by a 30% increase during 2008-2010, indicating cigarettes were less affordable after the federal tax increase. RIP continued to increase during 2010-2013 but decreased during 2013-2015, suggesting cigarettes have recently become more affordable for US smokers. State-level trends in RIP were consistent with overall national trends. Controlling for other factors, a $1 increase in the state excise tax was significantly associated with a 9% increase in RIP, indicating state taxes reduced affordability. Tax-induced price increases must keep pace with underlying economic conditions to ensure cigarettes do not become more affordable over time.
Project description:<h4>Objectives</h4>This study calculates cigarette affordability for 78 countries worldwide from 2001 to 2014 using the Relative Income Price (RIP) ratio defined as the percentage of per capita GDP required to purchase 100 packs of cigarettes using the lowest price from Economist Intelligence Unit (EIU) database, examine the association between cigarette affordability and cigarette consumption, and calculate the affordability elasticity of demand.<h4>Design and methods</h4>RIP (2001-2014) was calculated for 16 low-income economies, 19 lower middle-income economies, 13 upper middle-income economies, and 30 high-income economies. Ordinary least square regressions were used to analyze the association between cigarette affordability and consumption.<h4>Results</h4>Per capita consumption continued to rise in low-income countries and decreased slightly in lower middle-income countries as the RIP of cigarette consistently declined in low- and lower middle-income economies from 2001 to 2014. The real cigarette prices continued to decline in low- and lower middle-income countries and continued to rise in upper middle- and high-income countries. Though cigarettes were more expensive in HICs than were in LMICs, cigarettes were more affordable in HICs than were in LMICs. The regression results show a 10% increase in the RIP of cigarettes led to a 2% decrease in per capita consumption. The affordability elasticity of demand differed significantly between HICs and LMICs. However, the effect of cigarette affordability on consumption has not changed over time.<h4>Conclusions</h4>To control the smoking epidemic, low- and lower middle-income countries should further increase cigarette prices. The rate of price increase should exceed the rate of economic growth and outpace the inflation rate to make cigarettes less affordable and thereby reducing tobacco use.
Project description:BACKGROUND:The price of tobacco products in relation to the income of tobacco users-affordability-is recognised as a key determinant of tobacco use behaviour. The effectiveness of a price increase as a deterrent to tobacco use depends on how much price increases in relation to the income of the potential users. The aim of this paper is to examine the distribution of and trends in the affordability of tobacco products in Bangladesh. METHOD:Using four waves of International Tobacco Control Survey data on Bangladesh, this study measures affordability of tobacco products at the individual level as the ratio of self-reported price and self-reported income. The trends in affordability by brand categories of cigarettes and of bidi and smokeless tobacco are estimated using multivariate linear regression analysis. RESULTS:Despite significant increase in price, the affordability of cigarettes increased between 2009 and 2014-2015 due to income growth outpacing price increase. The increase was disproportionately larger for more expensive brands. The affordability of bidis increased over this period as well. The affordability of smokeless tobacco products remained unchanged between 2011-2012 and 2014-2015. CONCLUSION:The tax increases that were implemented during 2009-2015 were not enough to increase tobacco product prices sufficiently to outweigh the effect of income growth, and to reduce tobacco consumption. The findings from this research inform policymakers that in countries experiencing rapid economic growth, significant tax increases are needed to counteract the effect of income growth, in order for the tax increases to be effective in reducing tobacco use.
Project description:Background : Tobacco smoking remains a leading risk factor for disease burden globally. In India alone, about 1 million deaths are caused annually by smoking. Although increasing tobacco prices has consistently been found to be the most effective intervention to reduce tobacco use, the documentation of prices and taxes across time and space has not been an essential component of tobacco control surveillance in most jurisdictions. This study aimed to examine, using graphical methods, trends in smoking tobacco taxes and prices in India at national and state-level. Methods : We used retail prices, price indices, and unit values (household expenditures on a commodity divided by the quantity purchased) collected and reported by government agencies. For bidis and cigarettes, we examined current and real (inflation-adjusted) prices, affordability (cost in terms of income), and key tax changes at both national and state-level. Results : We show that real prices of bidis and cigarettes were relatively flat (even decreasing in the case of bidis) between 2000 and 2007, and clearly increasing from 2010. When rising income is taken into account, however, both cigarettes and bidis have become more affordable since 2000. We found that some but not all tax changes were accompanied by price changes and in particular, that tax decreases did not result in price decreases. Conclusion : It is feasible to evaluate tax and price policies at national and regional level using routinely collected data.
Project description:AIMS:To apply methods for measuring the affordability of beer in a large cross section of countries, and to investigate trends in affordability of beer over time. METHODS:We use the Relative Income Price (RIP), which uses per capita GDP, to measure the affordability of beer in up to 92 countries from 1990 to 2016 (69 countries were included in 1990, however the survey has since grown to include 92 countries). In addition to affordability, we also investigate trends in the price of beer. RESULTS:While beer is, on average, similarly priced in high-income (HICs) and low- and middle-income countries (LMICs), it is significantly more affordable in HICs. There is significant variation in both price and affordability in HICs and in LMICs. Beer has become cheaper in real terms in 49% (18/37) of HICs and 43% (20/46) of LMICs. Beer became more affordable in most HICs (RIP: 30/37 or 81%) and LMICs (RIP: 42/44 or 95%). CONCLUSIONS:The increased affordability over time of beer in most countries raises concerns about public health. Governments need to increase taxes on beer so that it becomes less affordable over time, in an effort to improve public health.
Project description:Excise taxes are the primary public health strategy used to increase the price of cigarettes in the United States. Rather than quitting or reducing consumption of cigarettes, some price-sensitive smokers may avoid state and local excise taxes by purchasing cigarettes from Indian reservations. The objectives of this study were to (1) provide the most recent state-specific prevalence of purchases made on Indian reservations by non-American Indians/Alaska Natives (non-AI/ANs) and (2) assess the impact of these purchases on state tax revenues. We used data from a large national and state-representative survey, the 2010-2011 Tobacco Use Supplement to the Current Population Survey, which collects self-reported measures on cigarette use and purchases. Nationwide, 3.8% of non-AI/AN smokers reported purchasing cigarettes from Indian reservations. However, in Arizona, Nevada, New Mexico, New York, Oklahoma, and Washington State, about 15% to 30% of smokers reported making such purchases, resulting in annual tax revenue losses ranging from $3.5 million (Washington State) to $292 million (New York) during 2010-2011. Strategies to reduce the sale of non- or lower-taxed cigarettes to non-AI/ANs on Indian reservations have the potential to decrease smoking prevalence and recoup lost revenue from purchases made on reservations.
Project description:<h4>Objective</h4>To quantify changes in tobacco tax rates and cigarette affordability after countries ratified the WHO Framework Convention on Tobacco Control (FCTC) using with the WHO MPOWER standards.<h4>Methods</h4>We used logistic regression to assess the association of FCTC ratification with adoption of at least 50% and 75% (high) of retail price tobacco tax rates for the most sold brands in countries, accounting for years since ratification and other covariates. We also compared cigarette affordability in 2014 with 1999.<h4>Results</h4>By 2014, 44% of high-income countries had taxes above 75% of retail value compared with 18% in 1998/1999. In 15 years, 69 countries increased the tobacco tax rate, 33 decreased it and one had the same tax rate. FCTC ratification was not associated with implementing high tobacco taxes. More fragile countries in terms of security, political, economic and social development were less likely to have at least 50% and 75% tobacco tax rates in 2014 compared with 1999. The higher the cigarette prices in 1999 the less likely the countries were to have at least 75% tobacco tax rates in 2014. However, cigarettes were less affordable in 2014 than in 1999 in countries that had ratified FCTC earlier.<h4>Conclusions</h4>Despite widespread FCTC ratification, implementing higher tobacco taxes remains incomplete. Guidelines for FCTC Article 6 implementation should assign definite targets for tobacco taxes and for implementation of a tax escalator that gradually increases taxes to match rising income levels. Fragile countries are less likely to have high tobacco taxes and less affordable cigarettes. The tobacco control community should intensify efforts to help fragile countries improve performance in FCTC implementation both through strengthening their administrative and technical capacity and through supporting basic functions of government.
Project description:The purpose of this paper was to examine trends in the use of premium and discount cigarette brands and determine correlates of type of brand used and brand switching.Data from the International Tobacco Control (ITC) US adult smoker cohort survey were analysed. The total study sample included 6669 adult cigarette smokers recruited and followed from 2002 to 2011 over eight different survey waves. Each survey wave included an average of 1700 smokers per survey with replenishment of those lost to follow-up.Over the eight survey waves, a total of 260 different cigarette brands were reported by smokers, of which 17% were classified as premium and 83% as discount brands. Marlboro, Newport, and Camel were the most popular premium brands reported by smokers in our sample over all eight survey waves. The percentage of smokers using discount brands increased between 2002 and 2011, with a marked increase in brand switching from premium to discount cigarettes observed after 2009 corresponding to the $0.61 increase in the federal excise tax on cigarettes. Cigarette brand preferences varied by age group and income levels with younger, higher income smokers more likely to report smoking premium brand cigarettes, while older, middle and lower income, heavier smokers were more likely to report using discount brands.Our data suggest that demographic and smoking trends favour the continued growth of low priced cigarette brands. From a tobacco control perspective, the findings from this study suggest that governments should consider enacting stronger minimum pricing laws in order to keep the base price of cigarettes high, since aggressive price marketing will likely continue to be used by manufacturers to compete for the shrinking pool of remaining smokers in the population.
Project description:AIMS:Novel methods in behavioral economics permit the systematic assessment of the relationship between cigarette consumption and price. Towards informing tax policy, the goals of this study were to conduct a high-resolution analysis of cigarette demand in a large sample of adult smokers and to use the data to estimate the effects of tax increases in 10 US States. DESIGN:In-person descriptive survey assessment. SETTING:Academic departments at three universities. PARTICIPANTS:Adult daily smokers (i.e. more than five cigarettes/day; 18+ years old; ?8th grade education); n?=?1056. MEASUREMENTS:Estimated cigarette demand, demographics, expired carbon monoxide. FINDINGS:The cigarette demand curve exhibited highly variable levels of price sensitivity, especially in the form of 'left-digit effects' (i.e. very high price sensitivity as pack prices transitioned from one whole number to the next; e.g. $5.80-6/pack). A $1 tax increase in the 10 states was projected to reduce the economic burden of smoking by an average of $530.6?million (range: $93.6-976.5 million) and increase gross tax revenue by an average of 162% (range: 114-247%). CONCLUSIONS:Tobacco price sensitivity is non-linear across the demand curve and in particular for pack-level left-digit price transitions. Tax increases in US states with similar price and tax rates to the sample are projected to result in substantial decreases in smoking-related costs and substantial increases in tax revenues.
Project description:OBJECTIVE:During the past decades, smoking prevalence in Greece was estimated to be near or over 40%. Following a sharp fall in cigarette consumption, as shown in current data, our objective is to assess smokers' sensitivity to cigarette price and consumer income changes as well as to project health benefits of an additional tax increase. METHODS:Cigarette consumption was considered as the dependent variable, with Weighted Average Price as a proxy for cigarette price, gross domestic product as a proxy for consumers' income and dummy variables reflecting smoking restrictions and antismoking campaigns. Values were computed to natural logarithms and regression was performed. Then, four scenarios of tax increase were distinguished in order to calculate potential health benefits. RESULTS:Short-run price elasticity is estimated at -0.441 and short-run income elasticity is estimated at 1.040. Antismoking campaigns were found to have a statistically significant impact on consumption. Results indicate that, depending on the level of tax increase, annual per capita consumption could fall by at least 209.83 cigarettes; tax revenue could rise by more than €0.74 billion, while smokers could be reduced by up to 530?568 and at least 465 smoking-related deaths could be averted. CONCLUSIONS:Price elasticity estimates are similar to previous studies in Greece, while income elasticity estimates are far greater. With cigarettes regarded as a luxury good, a great opportunity is presented for decisionmakers to counter smoking. Increased taxation, along with focused antismoking campaigns, law reinforcement (to ensure compliance with smoking bans) and intensive control for smuggling could invoke a massive blow to the tobacco epidemic in Greece.
Project description:<h4>Introduction</h4>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.<h4>Aims and methods</h4>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.<h4>Results</h4>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.<h4>Conclusions</h4>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.<h4>Implications</h4>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.