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An international analysis of cigarette affordability

School of Economics, University of Cape Town, Cape Town, South Africa

Correspondence to:
Mr Corné P van Walbeek
School of Economics, University of Cape Town, Cape Town 7701, South Africa; cwalbeek{at}commerce.uct.ac.za

Objective: To investigate how affordable cigarettes are in developed and developing countries, and to calculate by how much the affordability of cigarettes has changed between 1990 and 2001; and secondly, to investigate the relation between cigarette affordability and consumption.

Design: Affordability was defined as the cost of cigarettes relative to per capita income. Trends in cigarette affordability, and affordability elasticities of demand, were estimated using regression techniques.

Subjects: Seventy countries were investigated, of which 28 are categorised as high income developed countries, while 42 are categorised as developing countries. Cigarette prices were obtained for the main city/cities in the countries.

Results: Despite the fact that cigarettes are more expensive in developed countries, the high levels of income make cigarettes more affordable in these countries vis-à-vis developing countries. Of the 28 developed countries, cigarettes became more affordable in 11 and less affordable in 17 countries during the 1990s. Of the 42 developing countries, cigarettes became more affordable in 24 and less affordable in 18 countries. Based on a cross sectional analysis, a 1% increase in the relative income price (the inverse of cigarette affordability) is expected to decrease cigarette consumption by between 0.49–0.57%.

Conclusions: Cigarette affordability, more than just the price, determines cigarette consumption. While cigarettes have become more affordable in many developing countries, some developing countries (for example, South Africa, Poland, and Thailand) have implemented strong and effective tobacco control policies, and have been able to decrease cigarette consumption as a result.

Abbreviations: EIU, Economist Intelligence Unit; GDP, gross domestic product; RIP, relative income price; UBS, Union Bank of Switzerland

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