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Estimating the ‘consumer surplus’ for branded versus standardised tobacco packaging
  1. Philip Gendall1,
  2. Christine Eckert2,
  3. Janet Hoek1,
  4. Tessa Farley1,
  5. Jordan Louviere3,
  6. Nick Wilson4,
  7. Richard Edwards4
  1. 1Department of Marketing, University of Otago, Dunedin, Otago, New Zealand
  2. 2Marketing Discipline Group, University of Technology Sydney, Business School, Ultimo, New South Wales, Australia
  3. 3School of Marketing, University of South Australia, Sydney, New South Wales, Australia
  4. 4Department of Public Health, University of Otago, Wellington, New Zealand
  1. Correspondence to Professor Philip Gendall, Department of Marketing, University of Otago, P.O. Box 56, Dunedin 9054, New Zealand; Philip.gendall{at}otago.ac.nz

Abstract

Background Tobacco companies question whether standardised (or ‘plain’) packaging will change smokers’ behaviour. We addressed this question by estimating how standardised packaging compared to a proven tobacco control intervention, price increases through excise taxes, thus providing a quantitative measure of standardised packaging's likely effect.

Methods We conducted an online study of 311 New Zealand smokers aged 18 years and above that comprised a willingness-to-pay task comparing a branded and a standardised pack at four different price levels, and a choice experiment. The latter used an alternative-specific design, where the alternatives were a branded pack or a standardised pack, with warning theme and price varied for each pack.

Results Respondents had higher purchase likelihoods for the branded pack (with a 30% warning) than the standardised pack (with a 75% warning) at each price level tested, and, on average, were willing to pay approximately 5% more for a branded pack. The choice experiment produced a very similar estimate of ‘consumer surplus’ for a branded pack. However, the size of the ‘consumer surplus’ varied between warning themes and by respondents’ demographic characteristics.

Conclusions These two experiments suggest standardised packaging and larger warning labels could have a similar overall effect on adult New Zealand smokers as a 5% tobacco price increase. The findings provide further evidence for the efficacy of standardised packaging, which focuses primarily on reducing youth initiation, and suggest this measure will also bring notable benefits to adult smokers.

  • Packaging and Labelling
  • Price
  • Public policy

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Footnotes

  • Contributors PG and JH conceptualised and designed the project; with TF, PG and JH designed the questionnaire and oversaw the data collection. JL designed the choice experiment, oversaw data analysis and commented on several draft versions of the manuscript. PG undertook initial data analyses and, with JH, led the manuscript development. CE led the analysis and interpretation of the choice data, and contributed to several versions of the manuscript. JH and PG supervised TF, who undertook initial analyses of the willingness-to-pay (WTP) data and prepared a preliminary report on the study. PG, CE and JH revised the MS. NW and RE helped design the project, reviewed the questionnaire, and contributed to the final manuscript. All authors have seen and approved the final version; authors are listed in descending order of contribution. PG is guarantor of the manuscript.

  • Funding This study was assisted by a Health Research Council of New Zealand grant (13/094) that provided a summer scholarship to Tessa Farley.

  • Competing interests None declared.

  • Ethics approval Delegated authority from the University of Otago Human Ethics Committee.

  • Provenance and peer review Not commissioned; externally peer reviewed.

  • Data sharing statement All data from the study are reported in the article. Our human ethics approval data limits data sharing to the research team.

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