Smokers’ Response to Price Changes Suggests Enormous Potential of Taxation for Discouraging Smoking

This Policy Brief was written by Social Policy and Development Centre (SPDC) in Pakistan. The policy brief discusses the consumption patterns of cigarette smokers, including both price and non-price drivers of consumption. The researchers surveyed over 7,500 current and past smokers in Pakistan. Their findings suggest that the market is dominated by six brands, which are consumed by 80% of smokers, and only three of these brands make up 88% of the market. On average, smokers consume 13 cigarettes each day, which makes up 6% of their total spending. 30% of smokers report buying loose cigarettes, although this is prohibited by law, and 17.5% purchased cigarettes at a price below the minimum legal price. Throughout the last five years, 9.3% of smokers switched brands. Price concerns were cited as the reason for this change for 38% of these smokers. A significant portion of smokers also respond to price increases by smoking less or by quitting altogether. During the COVID-19 pandemic, 66% of the smokers who noticed a price increase smoked fewer cigarettes. In July 2019, 29% of smokers smoked fewer cigarettes and 13% attempted or seriously thought about quitting. The price decrease in July 2017, on the other hand, prompted 17% of smokers to consume more cigarettes. The survey also asked the respondents to consider how they would respond to a 25% to 30% increase in cigarette prices. 53% answered that they would consume fewer cigarettes in this scenario, and 40% answered that they would attempt to quit. Among past smokers, the researchers found that 56% quit due to health concerns and 36% quit following pressure from family and friends. The policy brief concludes with the policy recommendations based on these findings to effectively discourage smoking, especially through tax and price policies. 

A corresponding Report can be found here.