Does Increasing Cigarette Prices Impact Consumption?

Ajay K. Singh
September 7, 2017

An interesting article by Nicholas Bakalar in the Aug 23, 2017 New York Times “Well” section caught my eye. It discusses a paper by Stephanie Mayne and colleagues accepted in Epidemiology that supports a relationship between the price of cigarettes and consumption. Quoting from the abstract:

$1 increase in price [of cigarettes] was associated with a 3% reduction in risk of current smoking (aRR: 0.97, 95% confidence interval [CI]: 0.93, 1.0), a 7% reduction in risk of heavy smoking (aRR: 0.93, CI: 0.87, 0.99), a 20% increase in risk of smoking cessation (aRR 1.2, CI: 0.99, 1.4), and a 35% reduction in the average number of cigarettes smoked per day by heavy baseline smokers (ratio of geometric means: 0.65, CI: 0.45%, 0.93%). We found no association between smoking bans and outcomes, and no evidence that price effects were modified by the presence of bans.

A CDC Grand Rounds article titled Current Opportunities in Tobacco Control, which cites earlier work, supports the conclusions reached by Mayne et al. A 10% increase in the price reduces cigarette consumption by about 4%. The data from the chart below is pretty impressive. The progressive rise in the sales price of a pack of cigarette has resulted in a steady decline in cigarette sales.

The CDC article makes the following point: “Increasing the price of cigarettes discourages initiation among youths, prompts quit attempts, and reduces average cigarette consumption among those who continue to smoke.”

However, since early 2000 the price of cigarettes has remained relatively steady, but sales have continued to fall, suggesting that factors beyond price are also important.  These factors include tobacco control programs run by states, media campaigns, health warnings on tobacco packaging, changing attitudes about smoking and the tobacco industry, and reduced youth tobacco initiation.

An interesting article looking at the economics in the UK of increasing cigarette taxes makes two points:

  1. Nearly two-thirds of the price of a pack of cigarettes goes to taxes.
  2. Because people are addicted to cigarettes, demand price is inelastic and sales are unlikely to fall much.

The article also reaches some harsh observations: “Smokers already pay a lot of tax …[and] they do not cost the government much because they die early and save pension and health care spending. Higher taxes will increase inequality because the poor will pay a higher percentage of tax than the rich who are more likely to have given up. Higher taxes will encourage people to smuggle illegal cigarettes and avoid paying the tax.”

In the US, there is tremendous variability in the price of a pack of cigarettes. In New York State, the price currently is around $10.50 (and there is a proposal to raise it to $13 per pack). In contrast, price elsewhere is about half this amount (According to the website Fairreporters.net which lists the prices of cigarettes by state, $5.40 per pack in Kentucky and between $6 to $8 per pack in other states).

In summary, the jury is out on precisely how elastic demand is based on price, but it is a fair conclusion from published data that price does impact sales. Further, there seems to be ample room among many states in the US to increase cigarette taxes and, therefore, price.

But, at least one thing is indisputable: the benefits of not smoking.

Ajay Singh, MBBS, FRCP headshotDr. Ajay K. Singh is the Senior Associate Dean for Global and Continuing Education and Director, Master in Medical Sciences in Clinical Investigation (MMSCI) Program at Harvard Medical School. He is also Director, Continuing Medical Education, Department of Medicine and Renal Division at Brigham and Women’s Hospital in Boston.

*OPINIONS EXPRESSED BY OUR AUTHORS ARE VALUABLE TO US AT LEAN FORWARD, BUT DO NOT REPRESENT OFFICIAL POSITIONS OR STATEMENTS FROM HARVARD MEDICAL SCHOOL.

Marijuana Use: The National Academy Report

*OPINIONS EXPRESSED BY OUR GUEST AUTHORS ARE VALUABLE TO US AT LEAN FORWARD, BUT DO NOT REPRESENT OFFICIAL POSITIONS OR STATEMENTS FROM HARVARD MEDICAL SCHOOL.

By Ajay K. Singh, MBBS, FRCP, MBA
Tuesday, January 24, 2017

The use of marijuana for medical treatment is legal in 28 states and the District of Columbia (DC). And recreational marijuana (or pot) has been legalized in eight of those states and DC.

Marijuana is derived from the dried leaves, flowers, stems, and seeds from the hemp plant, Cannabis sativa. Delta-9-tetrahydrocannabinol (Delta-9-THC) is the primary psychoactive ingredient in marijuana.

The January 12, 2017 publication of the report, “The Health Effects of Cannabis and Cannabinoids: The Current State of Evidence and Recommendations for Research” by the blue ribbon National Academies of Sciences, Engineering and Medicine in Washington, D.C. provides some important information on the risks and benefits of marijuana.

The report is available online and is very well worth a read. Highlights (excerpted) include:

Therapeutic Effects

  • In adults with chemotherapy-induced nausea and vomiting, oral cannabinoids are effective antiemetics.
  • In adults with chronic pain, patients who were treated with cannabis or cannabinoids are more likely to experience a clinically significant reduction in pain symptoms.
  • In adults with multiple sclerosis (MS)-related spasticity, short-term use of oral cannabinoids improves patient-reported spasticity symptoms.
  • For these conditions, the effects of cannabinoids are modest; for all other conditions evaluated, there is inadequate information to assess their effects.

Cancer

  • The evidence suggests that smoking cannabis does not increase the risk for certain cancers (i.e., lung, head, and neck) in adults.
  • There is modest evidence that cannabis use is associated with one subtype of testicular cancer.
  • There is minimal evidence that parental cannabis use during pregnancy is associated with greater cancer risk in offspring.

Psychosocial

  • Recent cannabis use impairs the performance in cognitive domains of learning, memory, and attention. Recent use may be defined as cannabis use within 24 hours of evaluation.
  • A limited number of studies suggest that there are impairments in cognitive domains of learning, memory, and attention in individuals who have stopped smoking cannabis.
  • Cannabis use during adolescence is related to impairments in subsequent academic achievement and education, employment and income, and social relationships and social roles.

Mental Health

  • Cannabis use is likely to increase the risk of developing schizophrenia and other psychoses; the higher the use the greater the risk.
  • In individuals with schizophrenia and other psychoses, a history of cannabis use may be linked to better performance on learning and memory tasks.
  • Cannabis use does not appear to increase the likelihood of developing depression, anxiety, and posttraumatic stress disorder.
  • For individuals diagnosed with bipolar disorders, near daily cannabis use may be linked to greater symptoms of bipolar disorder than non-users.
  • Heavy cannabis users are more likely to report thoughts of suicide than non-users.

The 16-member National Academy committee comes to the following conclusion, “There is conclusive or substantial evidence that cannabis or cannabinoids are effective:

  • For the treatment for chronic pain in adults (cannabis)
  • Antiemetic’s in the treatment of chemotherapy-induced nausea and vomiting (oral cannabinoids)
  • For improving patient-reported multiple sclerosis spasticity symptoms (oral cannabinoids)

[Develop your skills in clinical research for CME credit st HMS Global Academy.]

Ajay Singh, MBBS, FRCP

Dr. Ajay K. Singh is the Senior Associate Dean for Global and Continuing Education and Director, Master in Medical Sciences in Clinical Investigation (MMSCI) Program at Harvard Medical School. He is also Director, Continuing Medical Education, Department of Medicine and Renal Division at Brigham and Women’s Hospital in Boston.

*OPINIONS EXPRESSED BY OUR AUTHORS ARE VALUABLE TO US AT LEAN FORWARD, BUT DO NOT REPRESENT OFFICIAL POSITIONS OR STATEMENTS FROM HARVARD MEDICAL SCHOOL.