LETTER

Big Mac index of cigarette affordability

A Lal, M Scollo

The VicHealth Centre for Tobacco Control, Melbourne, Australia; mscollo@cancervic.org.au

Keywords: Big Mac index; affordability

The first 150 words of the full text of this article appear below.

As for any other commodity, demand for tobacco responds to price changes: when prices rise, demand for tobacco falls. Price increases encourage cessation,¹ reduce average cigarette consumption among continuing smokers,² and deter initiation.³ Tax increases are thus widely accepted as a key component of tobacco control policy.^4–6

In calling for increases in tobacco tax, tobacco control advocates often find it useful to compare cigarette prices internationally with those in their own country. To do this, they must somehow convert prices in other countries using a standard measure, most commonly the price in $US. Exchange rates, however, may be influenced by many factors including inflation differentials, monetary policy, balance of payments, and market expectations.⁷ Guindon et al proposes "purchasing power parity" (PPP) as a more appropriate measure for comparison. This theory argues that exchange rates are only at their "correct" levels when they are equal to the ratio of the two . . . [Full text of this article]

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