Differential responsiveness to cigarette price by education and income among adult urban Chinese smokers: findings from the ITC China Survey

Abstract

Background There are few studies that examine the impact of tobacco tax and price policies in China. In addition, very little is known about the differential responses to tax and price increases based on socioeconomic status in China. Objective The goal of this study is to estimate the conditional cigarette consumption price elasticity among adult urban smokers in China using individual level longitudinal survey data. We also examine the differential responses to cigarette price increases among groups with different income and/or educational levels. Methods Multivariate analyses using the general estimating equations (GEE) method were conducted to estimate the conditional cigarette demand price elasticity using data from the International Tobacco Control (ITC) China Survey, a longitudinal survey of adult smokers in seven cities in China. The first three waves of the ITC China Survey data were used in this analysis. Analyses based on subsample by education and income were conducted. Findings Our results show that overall conditional cigarette demand price elasticity ranges from −0.12 to −0.14, implying a 10% increase in cigarette price would result in a reduction in cigarette consumption among adult urban Chinese smokers by 1.2% to 1.4%. No differential responses to cigarette price increase were found across education levels. The price elasticity estimates do not differ between high income smokers and medium income smokers. However, cigarette consumption among low income smokers did not seem to decrease after a price increase, at least among those who continued to smoke. Conclusion Relative to many other low- and middle-income countries, cigarette consumption among Chinese adult smokers is not very sensitive to changes in cigarette prices. The total impact of cigarette price increase would be larger if its impact on smoking initiation and cessation, as well as the price-reducing behaviors such as brand switching and trading down, were taken into account.

Effect of cigarette prices on smoking initiation and cessation in China: a duration analysis

“…Huang et al 27 estimated that price-reducing behaviour like increased purchasing in bulk (ie, cartons instead of packs) can lower the average price paid for cigarettes by a smoker in China by up to 15%, potentially offsetting the effect of price increases on smoking. The increasing evidence of price-reducing behaviour occurring at the expense of consumption-reducing behaviour in China is consistent with our findings of low cessation response, and may help explain previous findings of relatively weak price effects on the number of cigarettes consumed among smokers in China 28 29. Lance et al ,29 for example, find very low price responsiveness of smoking participation in China.…”

The influence of estimated retail tobacco sale price increase on smokers’ smoking habit in Jiangxi province, China: a cross-sectional study

“…So we should notice that the wide range of tobacco retail price in Jiangxi China makes the tobacco control work through price increase much more complicated, this is because the large tobacco retail price difference provides opportunity for substitution from higher priced to cheaper products. Huang estimate a price elasticity of consumption of −0.13 between 2006 and 2009 (Huang et al [ 13 ]),and Mao use national data to estimate a price elasticity of −0.15 (Mao et al [ 17 ]), the overall lack of price sensitivity in China raises the public health concern that tobacco tax policy will have little impact on smoking behavior. So we recommend the tobacco retail price increase measures need to apply all cigarette brands to avoid smokers switching to cheaper brands.…”

The economics of tobacco control (Part 2): evidence from the ITC Project

“…The second paper, by Huang et al ,12 estimates by what percentage Chinese smokers decrease their consumption in response to a given percentage change in the price of cigarettes (the conditional price elasticity of demand). In line with previous studies on China, the price elasticity is low compared to most other countries, with the conditional price elasticity estimated to be between −0.12 and −0.14.…”