Price elasticity of initiation and cessation of tobacco in India

October 22, 2020

Authors: Estelle P Dauchy and John Rijo
Tobacco Prevention Cessation

Abstract

Background:
About 267 million adults consume tobacco in some form in India, representing 28.6% of India’s adults. Smoking and smokeless tobacco (SLT) use related mortality is estimated at about 1.3 million every year or approximately 3500 deaths every single day. Although there are studies that estimate the price elasticity of tobacco use in India, currently no study examines how price changes affect the initiation or cessation of smoking or SLT use. Our objective was to estimate the price elasticity of tobacco initiation and cessation among adults, separately for smoking and SLT, by gender and income groups in India, and whether it differs pre- and post-GST

Methods and Data:
Using the nationally representative 2017 Global Adult Tobacco Survey (GATS) of about 74000 adults in India, we reconstruct an individuals’ history of tobacco use from their answers on the year initiation and cessation, and combine the data with historical annual prices across Indian states from the Indian labor bureau and Euromonitor. To estimate the price elasticity of tobacco use, initiation, and cessation, we use a linear probability model and a duration analysis. We also use propensity score matching (PSM) to adjust for confounding factors.

Results:
The mean age at initiation is about 18.9 and 18.8 years for smoking and SLT use, respectively, among daily users aged 20–34 years. Although the majority of regular tobacco users are interested in quitting, only about 38.5% of smokers and 33.2% of SLT users made an attempt to quit in the previous one-year period. Both initiation and cessation of smoking and SLT use were found to be sensitive to prices with a larger price sensitivity among lower-income groups and younger adults.

Conclusion:
Tax and price increases are effective policy tools to discourage individuals from initiating smoking or using SLT. Tax reforms that reduce the affordability of tobacco products also contribute to reducing initiation and encouraging quitting, with larger effects among the youth and lower-income groups, but these increases need to be uniform across tobacco products to limit consumers ability to substitute with cheaper products.