The relationship between price of tobacco and smoking

Abstract

University of Washington Abstract The relationship between price of tobacco and smoking Ruben Conner Chair of the Supervisory Committee: Acting Assistant Professor Joe Dieleman Global Health Department Background: Tobacco is well documented as being extremely harmful to health. Prior studies have shown that the price of cigarettes can be one of the best deterrents from smoking. However, most studies have taken place only in high income countries. I assemble a large panel dataset that includes low/middle countries and analyze the effect of price on smoking. Methods: Our overall goal is to estimate the price elasticity of tobacco. To do this, I employ two main models: a within-between estimator and a first difference model. The within-between estimator allows us to see the effect of cigarettes both cross-sectionally and within specific countries. The first difference model is excellent for looking at change over time but shows only the effect within countries. Results: Across countries, I find an elasticity of -.19, equivalent to a -1.9% decrease in consumption for a 10% increase in price. This cross-sectional estimate is slightly lower than estimates by other studies. I do not find a within country effect using multiple specifications of the model. We also do not find significant results for models that use prevalence rather than consumption as an outcome. Conclusion: We have found estimates for the price elasticity of tobacco that are lower than other studies. However, our analysis is hampered by a short panel and a lack of variation between countries.