Journal Article

The effects of a rise in cigarette price on cigarette consumption, tobacco taxation revenues, and of smoking-related deaths in 28 EU countries-- applying threshold regression modelling

Hsieh, Chi-Jung, Yeh, Chun-Yuan, Ho, Li-Ming, Schafferer, Christian, Lee, Jie-Min

2017

Overview

Background European Union public healthcare expenditure on treating smoking and attributable diseases is estimated at over €25bn annually. The reduction of tobacco consumption has thus become one of the major social policies of the EU. This study investigates the effects of price hikes on cigarette consumption, tobacco tax revenues and smoking-caused deaths in 28 EU countries. Methods Employing panel data for the years 2005 to 2014 from Euromonitor International, the World Bank and the World Health Organization, we used income as a threshold variable and applied threshold regression modelling to estimate the elasticity of cigarette prices and to simulate the effect of price fluctuations. Results The results showed that there was an income threshold effect on cigarette prices in the 28 EU countries that had a gross national income (GNI) per capita lower than US$5418, with a maximum cigarette price elasticity of −1.227. The results of the simulated analysis showed that a rise of 10% in cigarette price would significantly reduce cigarette consumption as well the total death toll caused by smoking in all the observed countries, but would be most effective in Bulgaria and Romania, followed by Latvia and Poland. Additionally, an increase in the number of MPOWER tobacco control policies at the highest level of achievment would help reduce cigarette consumption. Conclusions It is recommended that all EU countries levy higher tobacco taxes to increase cigarette prices, and thus in effect reduce cigarette consumption. The subsequent increase in tobacco tax revenues would be instrumental in covering expenditures related to tobacco prevention and control programs.

• Publisher: BioMed Central,BioMed Central Ltd,Springer Nature B.V,BMC
• Subject: Adolescent / Adult / Banking / Biostatistics / Cigarette consumption / Cigarette price / Cigarettes / Commerce - statistics & numerical data / Computer simulation / Consumption / Control programs / Deaths / Economic models / Elasticity of demand / Environmental Health / Epidemiology / European Union / Expenditures / Fatalities / GNI / Gross National Income / Health aspects / Health care expenditures / Health policies / Health services / Humans / Income / Low income groups / Medicine / Medicine & Public Health / Modelling / Models, Statistical / National income / Panel data / Per capita / Population / Prevention programs / Price elasticity / Price increases / Prices / Prices and rates / Pricing policies / Public Health / Regression Analysis / Research Article / Revenue / Rural areas / Smoking / Smoking - economics / Smoking - epidemiology / Smoking - mortality / Studies / systems and management in high-income countries / Tax increases / Tax revenues / Taxation / Taxes / Taxes - economics / Threshold regression model-Smoking-attributable mortality / Thresholds / Tobacco / Tobacco habit / Tobacco Products - economics / Vaccine / Variables