Economic Remedies to Reduce Smoking

  • John Joshua


Taxes imposed on the consumption of tobacco may be regarded as regressive, firstly because poorer smokers pay a greater proportion of their income in tax for each cigarette smoked, and secondly, lower social classes tend to smoke more than those in other social classes. However, the external cost caused by smoking has to be considered. A Pigovian tax may be imposed to compensate for the external costs resulting from smoking which could be earmarked to cover the external costs caused by smoking. The effectiveness of a tax policy will depend on elasticity of demand. Price interventions are the most effective policies in reducing the rate of mortality caused by smoking; the effectiveness increases when combined with non-price interventions.


Economic remedies Elasticity of demand External costs Non-price intervention Pigovian tax Regressive tax 


  1. Abedian, I. (2000). Situation analysis: An overview of the role of the World Bank and WHO in global tobacco control. The WHO International Conference on Global Tobacco Control Law. Towards a WHO Framework Convention on Tobacco Control. New Delhi.Google Scholar
  2. Abrevaya, J., & Puzzello, L. (2012). Taxes, cigarette consumption, and smoking intensity: Comment. American Economic Review, 102(4), 1751–1763.CrossRefGoogle Scholar
  3. Adda, J., & Cornaglia, F. (2006). Taxes, cigarette consumption and smoking intensity. American Economic Review, 96(4), 1013–1028.CrossRefGoogle Scholar
  4. Adda, J., & Cornaglia, F. (2013). Taxes, cigarette consumption, and smoking intensity: Reply. American Economic Review, 103(7), 3102–3114.CrossRefGoogle Scholar
  5. Ahrens, D. (2009). Tobacco taxes and cigarette consumption in low income populations. American Journal of Public Health, 2009, 99(1), 6.CrossRefGoogle Scholar
  6. Becker, G. S., Grossman, M. et al. (1994). An empirical analysis of cigarette addiction. American Economic Review, 84(3), 396–418.Google Scholar
  7. Callison, K., & Kaestner, R. (2014). Do higher tobacco taxes reduce adult smoking? New evidence of the effect of recent cigarette tax increases on adult smoking. Economic Inquiry, 52(1), 155–172.CrossRefGoogle Scholar
  8. Chaloupka, F. C., Cummings, K. M. et al. (2002). Tax, price and cigarette smoking: Evidence from the tobacco documents and implications for tobacco company marketing strategies. Tobacco Control, 11, 162–172.CrossRefGoogle Scholar
  9. Chaloupka, F. J., & Grossman, M. (1996). Price, tobacco control policies, and youth smoking. Working Paper. University of Chicago. Department of Economics, Chicago.Google Scholar
  10. Chaloupka, F. J., & Wechsler, H. (1997). Price, tobacco control policies and smoking among young adults. Journal of Health Economics, 16, 359–373.CrossRefGoogle Scholar
  11. Chaloupka, F. J., Yurekli, A. et al. (2012). Tobacco taxes as a tobacco control strategy. Tobacco Control, 21, 172–180.CrossRefGoogle Scholar
  12. Cho, K. S. (2006). Tobacco control policy of the Republic of Korea, 2005. Kwachon: Ministry of Health and Welfare.Google Scholar
  13. Choi, K., & Boyle, R. G. (2013). Minnesota smokers’ perceived helpfulness of 2009 federal tobacco tax increase in assisting smoking cessation: A prospective cohort study. Bio Med Central Public Health, 13, 965.CrossRefGoogle Scholar
  14. Constitutional Court of the Republic of Korea. (1987). The constitution of the Republic of Korea. Translated by the Constitutional Court of the Republic of Korea. Seoul: Government of the Republic of Korea.Google Scholar
  15. Dautzenberg, B. (2009). Commentary on Peretti-Watel, et al. (2009). The cost of a chronic disease. Addiction, 104, 1729–1730.CrossRefGoogle Scholar
  16. DeCicca, P. D., Kenkel, S. et al. (2010a). Excise tax avoidance: The case of state cigarette taxes. National Bureau of Economic Research, Working Paper 15941. Cambridge, MA: National Bureau of Economic Research.Google Scholar
  17. DeCicca, P. D., Kenkel, S. et al. (2010b). Who pays cigarette taxes? The impact of consumer price search. National Bureau of Economic Research Working Paper 15942. Cambridge, MA: National Bureau of Economic Research.Google Scholar
  18. Farrelly, M. C., Nimsch, C. T. et al. (2004). The effects of higher cigarette prices on tar and nicotine consumption in a cohort of adult smokers. Health Economics, 13(1), 49–58.CrossRefGoogle Scholar
  19. Ferrante, D., Levy, D. et al. (2007). The role of public policies in reducing smoking prevalence and deaths: The Argentina tobacco policy simulation model. Revista Panamericana de Salud Pública, 21(1), 37–49.CrossRefGoogle Scholar
  20. Forster, M., & Jones, A. M. (2001). The role of tobacco taxes in starting and quitting smoking: Duration analysis of British data. Journal of the Royal Statistical Society Series A (Statistics in Society), 164(3), 517–547.CrossRefGoogle Scholar
  21. Gilmore, A. B., Tavakoly, B. et al. (2013). Understanding tobacco industry pricing strategy and whether it undermines tobacco tax policy. Addiction, 108, 1317–1326.CrossRefGoogle Scholar
  22. Greenbaum, P., Foster-Johnson, L. et al. (1996). Co-occurring addictive and mental disorders among adolescents: Prevalence research and future directions. American Journal of Orthopsychiatry, 66(1), 52–60.CrossRefGoogle Scholar
  23. Hu, T., & Mao, Z. (2002). Effects of cigarette tax on cigarette consumption and the Chinese economy. Tobacco Control, 11(2), 105–108.CrossRefGoogle Scholar
  24. Iwasaki, N., Tremblay, C. H. et al. (2006). Advertising restrictions and cigarette smoking: Evidence from myopic and rational addiction models. Contemporary Economic Policy, 24(3), 370–381.CrossRefGoogle Scholar
  25. Joshua, J. (2016). China’s economic growth: Towards sustainable economic development and social justice. vol. II: The impact of economic policies on the quality of life. Basingstoke, Hampshire: Palgrave Macmillan.Google Scholar
  26. Keeler, T. E., & Hu, T. W. E. A. (1993). Taxation, regulation, and addiction: A demand function for cigarettes based on time-series evidence. Journal of Health Economics, 12(1), 1–18.CrossRefGoogle Scholar
  27. Keller, P. A., Greenseid, L. O. et al. (2015). Seizing the opportunity: Increasing use of cessation services following a tobacco tax increase. BioMedCentral Public Health, 15, 354.Google Scholar
  28. Kim, H.-C., & Cho, K.-S. E. A. (2012). The effects of the increase in tobacco price on adolescent smoking in Korea: Smoking reduction and brand switching. Health and Social Welfare Review, 32(3), 429–460.CrossRefGoogle Scholar
  29. López-Nicolás, A., Badillo-Amador, L. et al. (2013). Will the European Union’s new tobacco tax legislation lead to reductions in smoking prevalence? Evidence from a quasi-experiment in Spain. Nicotine & Tobacco Research, 15(12), 1963–1970.CrossRefGoogle Scholar
  30. Lewit, E. M. (1989). U.S. tobacco taxes: Behavioural effects and policy implications. British Journal of Addiction, 84, 1217–1235.CrossRefGoogle Scholar
  31. Lewit, E. M., & Coate, D. (1982). The potential for using excise taxes to reduce smoking. Journal of Health Economics, 1, 121–145.CrossRefGoogle Scholar
  32. Lewit, E. M., Coate, D. et al. (1981). The effects of government regulations on teenage smoking. Journal of Law and Economics, 25, 545–569.CrossRefGoogle Scholar
  33. MacKillop, J., Few, L. R. et al. (2012). High-resolution behavioural economic analysis of cigarette demand to inform tax policy. Addiction, 107, 2191–2200.CrossRefGoogle Scholar
  34. Main, C., Thomas, S. et al. (2008). Population tobacco control interventions and their effects on social inequalities in smoking: Placing an equity lens on existing systematic reviews. Bio Med Central Public Health, 8, 178.CrossRefGoogle Scholar
  35. Moodie, C., & Hastings, G. (2010). Tobacco packaging as promotion. Tobacco Control, 19(2), 168–170.CrossRefGoogle Scholar
  36. Musgrave, R. A. (1959). The theory of public finance: A study in public economy. Tokyo: McGraw-Hill Kogakusha.Google Scholar
  37. Musgrave, R. A., & Musgrave, P. B. (1973). Public finance in theory and practice. Tokyo: McGraw-Hill Kogakusha.Google Scholar
  38. O’Donoghe, T., & Rabin, M. (1999). Doing it now or later. The American Economic Review, 89(1), 103–124.CrossRefGoogle Scholar
  39. Orphanides, A., & Zervos, D. (1995). Rational addiction with learning and regret. Journal of Political Economy, 103(4), 739–758.CrossRefGoogle Scholar
  40. Peto, R., Darby, S. et al. (2000). Smoking, smoking cessation, and lung cancer in the U.K. since 1950: Combination of national statistics with two-case control studies. British Medical Journal, 321, 323–329.CrossRefGoogle Scholar
  41. Ranson, M. K., Jha, P. et al. (2002). Global and regional estimates of the effectiveness and cost-effectiveness of price increases and other tobacco control policies. Nicotine & Tobacco Research, 4, 311–319.CrossRefGoogle Scholar
  42. Remler, D. K. (2004). Poor smokers, poor quitters, and cigarette tax regressivity. American Journal of Public Health, 94(2), 225–229.CrossRefGoogle Scholar
  43. Tauras, J. A. (2006). Smoke-free air laws, cigarette prices and adult cigarette demand. Economic Inquiry, 44(2), 333–342.CrossRefGoogle Scholar
  44. Tauras, J. A., O’Malley, P. M. et al. (2001) Effects of price and access laws on teenage smoking initiation: A national longitudinal analysis. ImpacTEEN – Youth, Education, & Society. Research Paper Series, No. 2. Chicago: University of Illinois at Chicago.Google Scholar
  45. Tekin, E., Mocan, N. et al. (2009). Do adolescents with emotional or behavioral problems respond to cigarette prices?. Southern Economic Journal, 76(1), 67–85.CrossRefGoogle Scholar
  46. Vangeli, E., Stapleton, J. et al. (2011). Predictors of attempts to stop smoking and their success in adult general population samples: A systematic review. Addiction, 106(12), 2110–2121.CrossRefGoogle Scholar
  47. Wan, J. (2004). Cigarette tax revenues and tobacco control in Japan. Applied Economics, 38, 1663–1675.CrossRefGoogle Scholar
  48. Wang, L. Y., Zhong, Y. et al. (2005). Direct and indirect costs of asthma in school-age children. Preventing Chronic Diseases, 2(1), A11.Google Scholar
  49. Warner, K. E. (1986). Smoking and health implications of a change in the federal cigarette excise tax. Journal of American Medical Association, 255, 1028–1032.CrossRefGoogle Scholar
  50. World Bank. (1999). Curbing the epidemic: Governments and the economics of tobacco control. Washington, DC: The World Bank.CrossRefGoogle Scholar
  51. Young, K. D., & Park, K. (2009). Local governments’ dependence on tobacco tax revenue: A deterrent to tobacco control in the Republic of Korea. Bulletin of the World Health Organization, 87, 692–699.CrossRefGoogle Scholar

Copyright information

© The Author(s) 2017

Authors and Affiliations

  • John Joshua
    • 1
  1. 1.Deakin UniversityMelbourneAustralia

Personalised recommendations