The European Journal of Health Economics

, Volume 15, Issue 9, pp 991–998

Brand switching or reduced consumption? A study of how cigarette taxes affect tobacco consumption

Authors

  • Chiang-Ming Chen
    • Department of EconomicsNational Chi-Nan University
  • Kuo-Liang Chang
    • Department of EconomicsSouth Dakota State University
  • Lin Lin
    • Department of Banking and FinanceNational Chi-Nan University
    • Department of Senior Citizen Service ManagementNational Taichung University of Science and Technology
Original Paper

DOI: 10.1007/s10198-013-0549-1

Cite this article as:
Chen, C., Chang, K., Lin, L. et al. Eur J Health Econ (2014) 15: 991. doi:10.1007/s10198-013-0549-1

Abstract

We examined the influence of cigarette taxes on tobacco consumption, with an emphasis on smokers’ choice between reducing cigarette consumption and switching brands. We constructed three scenario-based models to study the following two subjects: (1) the relationship between deciding whether to reduce one’s cigarette consumption and to practice brand switching (simultaneous or sequential); (2) the key determinants that affect smokers’ decisions in terms of their consumption and brand switching when facing higher taxes. We applied data collected from a survey in Taiwan, and the results indicated that both independent and two-stage decision-making models generated very similar conclusions. We also found that gender difference contributed to reduce cigarette consumption. In addition, this study indicated that high-income smokers were less likely to switch brands, whereas well-educated smokers were more likely to switch brands. Most importantly, we questioned the effectiveness of cigarette tax policy, as our results suggested that higher price did not necessarily reduce consumption. Indeed, data indicated that <24 % of smokers actually reduced their cigarette consumption after the tax on cigarettes increased.

Keywords

Cigarette smokingBrand switchingCigarette tax

JEL Classifications

I10I12I18

Copyright information

© Springer-Verlag Berlin Heidelberg 2013