Do Cigarette Prices Impact the Decision to Start or to Stop Smoking?

25 Nov 2019 - 12:45

Many studies have evaluated the impact of cigarette prices on the demand for cigarettes, but less research has been done on the impact of these prices on the decision to initiate smoking or to quit the habit. Such studies are particularly rare in low- and middle-income countries due the scarcity and/or quality of data.

To fill the research gap, we created a new dataset reflecting the history of smoking behavior among 2,079 men in Kenya using the 2014 Global Adult Tobacco Survey (GATS). We relied on self-reported smoking behavior among these individuals over time and constructed a panel following individuals from 1960 to the time they decided to start smoking, quit, or continue to smoke past 2014. The study was limited to men since they represent the majority of cigarette users in Kenya.

The information on smoking behavior was then linked to historical data on cigarettes prices assembled by REEP’s DATA project.

Given that the data were panel data, we employed numerous tests in order to select the best approach to analyze them. In the end, we decided to estimate a pooled linear model with propensity score matching (PSM) and a split duration model to estimate the effect of prices on smoking transitions, i.e. smoking initiation and quitting.

We found that higher cigarette prices suppressed smoking initiation and encouraged smoking cessation. The price elasticity of initiation ranged from -0.03 to -0.14 with young adults (aged 15-35) exhibiting the largest response. This means that a 10% increase in price reduced the likelihood of smoking initiation by about 1.4% among the population group that is most vulnerable to smoking initiation.

The price elasticity of cessation among young adults was 0.08, which means that a 10% increase in cigarette prices will result in 0.8% of smokers quitting their habit. The price elasticity of cessation among smokers with low income was twice as large: 0.16. This means that a 10% increase in cigarette prices will make 1.6% of poor smokers stop smoking.

The relatively low price elasticities are likely related to the increasing affordability of cigarettes over time and the lack of cessation services in Kenya.

Despite the low price elasticities, the results demonstrate the power of higher cigarettes prices to reduce young smoking prevalence and to encourage smokers, and especially poor smokers, to quit. Therefore, a tobacco tax increase that results in higher cigarette prices is a progressive policy that helps the poor to address their addiction, lowers their expenses on a product with adverse health consequences, reduces the probability of catastrophic health expenditures, and allows them the spend more on other goods and services.

We conclude that higher prices of tobacco products can significantly reduce initiation and increase cessation, thus improving health, especially among the most vulnerable population subgroups.

Estelle Dauchy and Hana Ross. The Effect of Price and Tax Policies on the Decision to Smoke in Kenya. 2019. Addiction, 114, 1249–1263; doi: 10.1111/add.14623; https://onlinelibrary.wiley.com/doi/abs/10.1111/add.14623