Background Raising tobacco taxation and prices is an effective policy tool to reduce tobacco use and has been identified by the WHO Framework Convention for Tobacco Control (FCTC) as a leading tobacco control strategy, and highlighted with the sustainable developmental goals (SDGs).
It is important to base the tobacco taxation and pricing policies on the consumers’ actual responsiveness to price rises which is measured by price elasticity (PE) of demand. Policy makers use PE estimates to design effective taxation policies and to project the impact of different policy options on tobacco consumption and their revenues.
This study aims to estimate the PE of demand for cigarettes among adult Pakistanis and to distinguish the effect on smoking prevalence and intensity.
Methods We used data from Pakistan’s 2014 Global Adult Tobacco Survey (GATS). GATS is part of the WHO’s global tobacco surveillance system to monitor tobacco use and key tobacco control indicators in a nationally representative household survey. A total of 7831 individuals aged 15+ years participated in the survey. We estimated PE using the standard two-part model for cross-sectional studies; smoking participation and smoking intensity. The probability of smoking cigarettes was estimated using a logit model, and for smoking intensite an Ordinary Least Squares regression model was used. Explanatory variables in both models were: price, demographic characteristics, indicators of the socioeconomic status of individuals, rural/urban residence, knowledge about smoking hazards, exposure to anti-smoking messages and cigarette advertisements and smoking restrictions at home. Analyses were weighted to adjust for national representation.
Results The adult PE of cigarettes demand was estimated to be -0.43. The overall PE is comprised of a statistically non-significant PE of smoking participation (-0.17) and statistically significant PE of smoking intensity (-0.26), indicating that a 10% increase in price is expected to reduce smoking prevalence by 1.7% on average and can decrease the average number of cigarettes smoked by 2.6%.
The price elasticity is slightly reduced if estimated for only males (-0.40) and the magnitude increased to -0.71 if the highest income quintile is excluded from the analysis. If individuals exposed to high price cigarettes (PKR >150) are excluded from the study, an increase in the price of (low priced) cigarettes would significantly decrease both smoking participation and intensity and impact would be higher for smoking participation (PE=-1.01).
Conclusion The analysis yielded negative price elasticity of cigarettes demand for Pakistani adults, indicating an increase in price would decrease cigarette use both by decreasing smoking prevalence and daily consumption among smokers in the country. We found that an increase in the price of low priced cigarettes would have a greater negative impact on smoking prevalence and daily consumption by smokers. These findings demonstrate that cigarette prices can be used as an effective policy tool to control smoking in Pakistan.
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