The Economics of Smoking

Abstract

Table of Contents 1. Introduction and overview 1.1 Coverage 1.1 Health consequences of tobacco consumption 2. The impact of price on the demand for tobacco products 2.1 Conventional studies of cigarette demand 2.1.1 Analysis of aggregate data 2.1.2 Analysis of individual level data 2.2 Addiction models and cigarette demand 2.2.1 Imperfectly rational addiction models 2.2.2 Myopic addiction models 2.2.3 Rational addiction models 2.2.4 Critiques of the rational addiction model 2.3 Behavioral economic analyses of cigarette demand 2.4 Econometric studies of the demand for other tobacco products 3. Cigarette and other tobacco taxation 3.1 Comparative standards and the effects of tax on price 3.1.1 Purposes and methods of taxation 3.1.2 Effects of taxes on retail price 3.1.3 Variations in cigarette tax across countries and states and the issue of smuggling 3.2 Fairness standards 3.2.1 Horizontal and vertical equity 3.2.2 The benefit principle 3.3 Public health standards 3.3.1 The social cost of smoking 3.3.2 The health benefits of increasing cigarette taxes 3.4 Economic efficiency and the pursuit of an optimal cigarette tax 3.4.1 Negative externalities associated with smoking 3.4.2 Other efficiency considerations 4. Advertising, promotion, and the demand for tobacco products 4.1 Theoretical and conceptual issues 4.2 Econometric evidence 4.3 Findings from the non-economic literature 5. Other tobacco control policies and demand 5.1 Health information and counter-advertising 5.2 Restrictions on cigarette smoking 5.3 Limits on youth access to tobacco products 6. Agricultural policy and the macroeconomic implications of tobacco 6.1 Size and nature of the tobacco industry 6.1.1 The global industry 6.1.2 The U.S. tobacco industry 6.2The impact of the U.S. tobacco agriculture regulatory system 6.2.1 Nature of the system and its impact on tobacco farming 6.2.2 Relevance of the tobacco program to smoking and health 6.3The contribution of the tobacco industry to the economy 6.3.1 States and nations 6.3.2 Tobacco farm communities Conclusion ReferencesEconomics of Smoking -p. 13 Concern about the health consequences of smoking predates the "modern era" by nearly four centuries. In 1604, for example, King James I of England lambasted smoking as "a custome lothsome to the eye, hatefull to the Nose, harmefull to the braine, dangerous to the Lungs, and in the blacke stinking fume thereof, neerest resembling the horrible Stigian smoke of the pit that is bottomlesse" (as quoted in Sullum, 1998, p. 18). King James subsequently raised the tax on tobacco by 1000%, deriving significant revenues for his coffers. This illustrates the profound dilemma that has confronted policy decision makers ever since: whatever its health consequences, tobacco has long been truly a "golden leaf" for farmers and politicians alike. Its role in the very earliest commerce between England and the American colonies is legendary, as is its role in contemporary politics (Taylor, 1984;Fritschler and Hoefler, 1996).Economics of Smoking -p. 4 million adults, almost a qu...

Evaluación de las políticas contra el tabaquismo en países latinoamericanos en la era del Convenio Marco para el Control del Tabaco

“…Esta política se basa sobre todo en la evidencia de países de ingresos altos en los que un incremento de 10% del costo real de los cigarrillos precipita una disminución de 3 a 5% del consumo per cápita del tabaco; los precios más elevados promueven el abandono del hábito y la disminución del uso en consumidores continuos. 2,35 La información que procede de países de ingresos medios y bajos sugiere que son posibles disminuciones mayores del consumo relacionadas con el incremento de los precios; por ejemplo, un estudio sobre las variaciones del precio en México de 1994 a 2002 reveló que un aumento de 10% en el impuesto causó un descenso del consumo de 6.2%. 36 Sin embargo, muchas de las vías a través de las cuales el impuesto o el precio tienen un efecto en la conducta relacionada con el consumo del tabaco todavía son relativamente desconocidas.…”

The Characteristics of Smoking Cessation Behavior by the Stage of Change in Industrial Workers

“…Net costs would include consideration of the economic benefits of taxes, agricultural revenue, ancillary economic activity, and the "costs" of longer lives among nonsmokers that might offset the medical care costs of smokers or their lost productivity while they are alive (Warner 1987;Viscusi 1994;Barendregt et al 1997; U.S. Department of the Treasury 1998). A thorough discussion of the various methodologies and results is beyond the scope of this chapter, but Warner and colleagues (1999), Chaloupka and Warner (2000), Lightwood and colleagues (2000), and Max (2001) have provided extensive reviews of these issues. The discussion that follows includes a brief review of recently published findings.…”

Cigarette Price Minimization Strategies in the United States: Price Reductions and Responsiveness to Excise Taxes

“…This decrease may be a result of some potential smokers choosing not to smoke and more successful quit attempts among current smokers (Chaloupka et al, 2002;Chaloupka & Warner, 1999;Frieden et al, 2005;Hyland et al, 2005Hyland et al, , 2006Levy et al, 2000;Lewitt & Coate, 1982;Licht et al, 2011;McGoldrick & Boonn, 2010). Unfortunately, not all smokers will respond beneficially to tax increases, and some will continue their usual smoking behaviors by either using compensatory price minimization strategies (Choi, Hennrikus, Forster, & St Claire, 2012;DeCicca, Kenkel, & Liu, 2010;Fong et al, 2006;Frieden et al, 2005;Goolsble, Lovenheim, & Slemrod, 2010;Hyland, Higbee, Bauer, Giovino, & Cummings, 2004;Hyland et al, 2005Hyland et al, , 2006Licht et al, 2011;Pesko, Kruger, & Hyland, 2012; U.S. Department of Health and Human Services, 2000;White, Gilpin, White, & Pierce, 2005) or paying higher prices.…”

“…Raising cigarette prices, primarily through taxation, decreases the prevalence of tobacco use (Chaloupka, 1999;Chaloupka, Cummings, Morley, & Horan, 2002;Chaloupka & Warner, 1999;Farrelly, 2009;Frieden et al, 2005;Levy, Cummings, & Hyland, 2000). This decrease may be a result of some potential smokers choosing not to smoke and more successful quit attempts among current smokers (Chaloupka et al, 2002;Chaloupka & Warner, 1999;Frieden et al, 2005;Hyland et al, 2005Hyland et al, , 2006Levy et al, 2000;Lewitt & Coate, 1982;Licht et al, 2011;McGoldrick & Boonn, 2010).…”