A duration analysis of the role of cigarette prices on smoking initiation and cessation in developing countries

Abstract

This study evaluates the impact of cigarette prices on smoking initiation and cessation among adults in two pooled samples of 6 low- to lower-middle income countries (LMICs) and 8 upper-middle income countries (UMICs). We find that, while higher prices reduce smoking across the board, this reduction occurs through different behavioral mechanisms in lower versus higher income countries. Specifically, cigarette prices reduce smoking rates by deterring initiation in LMICs while in UMICs they act primarily by promoting cessation. Because current smoking rates are relatively lower in LMICs and relatively higher in UMICs, this differential mechanism underscores the adaptability of tobacco prices as a tool for regulating tobacco use across countries at different levels of development; it shows that prices can be used to sustain the relatively low rates of smoking in LMICs by preventing entry of new smokers, and can reduce the relatively high rates of smoking in UMICs by encouraging exit of existing smokers. Using split-population duration models and controlling for fixed and time-varying unobserved country characteristics, we estimate that the price elasticity of initiation in LMICs is −0.74 and the price elasticity of cessation in UMICs is 0.51.

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Notes

  1. 1.

    Though Poland is currently classified as a high-income country, it was in the upper-middle income range during most of the analysis period.

  2. 2.

    We are not able to observe all subjects in this sample from the age of 15 due to unavailability of price data extending that far back in time for some individuals. Those individuals for whom price data are not available from age 15 are instead observed from the earliest year when price data become available for their country. Thus, the median age of start of observation is 17 years old.

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Acknowledgments

The authors wish to thank Don Kenkel for valuable comments on previous versions of this study. The findings and conclusions in this article are those of the authors and do not necessarily represent the views of the US Centers for Disease Control and Prevention or the University of Illinois at Chicago.

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Correspondence to Deliana Kostova.

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Kostova, D., Chaloupka, F.J. & Shang, C. A duration analysis of the role of cigarette prices on smoking initiation and cessation in developing countries. Eur J Health Econ 16, 279–288 (2015). https://doi.org/10.1007/s10198-014-0573-9

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Keywords

  • Cigarette prices
  • Tobacco use
  • Smoking initiation
  • Smoking cessation
  • Duration analysis

JEL Classification

  • I1