Article Text

PDF
Price, tax and tobacco product substitution in Zambia
  1. Michal Stoklosa1,
  2. Fastone Goma2,
  3. Nigar Nargis1,
  4. Jeffrey Drope1,
  5. Grieve Chelwa3,
  6. Zunda Chisha4,
  7. Geoffrey T Fong5,6,7
  1. 1Economic and Health Policy Research, American Cancer Society, Atlanta, Georgia, USA
  2. 2School of Medicine, University of Zambia, Lusaka, Zambia
  3. 3Graduate School of Business, University of Cape Town, Cape Town, South Africa
  4. 4School of Economics, University of Cape Town, Cape Town, South Africa
  5. 5Department of Psychology, University of Waterloo, Waterloo, Ontario, Canada
  6. 6School of Public Health and Health Systems, University of Waterloo, Waterloo, Ontario, Canada
  7. 7Ontario Institute for Cancer Research, Toronto, Ontario, Canada
  1. Correspondence to Michal Stoklosa, American Cancer Society, Atlanta, GA 30303, USA; michal.stoklosa{at}cancer.org

Abstract

Background In Zambia, the number of cigarette users is growing, and the lack of strong tax policies is likely an important cause. When adjusted for inflation, levels of tobacco tax have not changed since 2007. Moreover, roll-your-own (RYO) tobacco, a less-costly alternative to factory-made (FM) cigarettes, is highly prevalent.

Data and methods We modelled the probability of FM and RYO cigarette smoking using individual-level data obtained from the 2012 and 2014 waves of the International Tobacco Control (ITC) Zambia Survey. We used two estimation methods: the standard estimation method involving separate random effects probit models and a method involving a system of equations (incorporating bivariate seemingly unrelated random effects probit) to estimate price elasticities of FM and RYO cigarettes and their cross-price elasticities.

Results The estimated price elasticities of smoking prevalence are −0.20 and −0.03 for FM and RYO cigarettes, respectively. FM and RYO are substitutes; that is, when the price of one of the products goes up, some smokers switch to the other product. The effects are stronger for substitution from FM to RYO than vice versa.

Conclusions This study affirms that increasing cigarette tax with corresponding price increases could significantly reduce cigarette use in Zambia. Furthermore, reducing between-product price differences would reduce substitution from FM to RYO. Since RYO use is associated with lower socioeconomic status, efforts to decrease RYO use, including through tax/price approaches and cessation assistance, would decrease health inequalities in Zambian society and reduce the negative economic consequences of tobacco use experienced by the poor.

  • taxation
  • price
  • public policy
  • economics

Statistics from Altmetric.com

Footnotes

  • Contributors MS, NN, JD and GTF contributed to the study design. MS conducted the multivariate analysis and wrote the first draft of the manuscript. All authors contributed to interpretation of results and to refinement, writing and editing of the final manuscript.

  • Funding The ITC Zambia Project (Waves 1 and 2) was supported by a grant from the Canadian Institutes of Health Research (MOP-115016). Geoffrey T. Fong was supported by a Senior Investigator Grant from the Ontario Institute for Cancer Research. Additional support in preparing this paper was provided to University of Waterloo by the Canadian Institutes of Health Research (FDN-148477).

  • Competing interests None declared.

  • Patient consent Not required.

  • Ethics approval Office of Research Ethics, University of Waterloo, Canada and the University of Zambia Biomedical Research Ethics Committee.

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

  • Correction notice This article has been corrected since it was published Online First. Additional details about support were added to the Funding section.

Request Permissions

If you wish to reuse any or all of this article please use the link below which will take you to the Copyright Clearance Center’s RightsLink service. You will be able to get a quick price and instant permission to reuse the content in many different ways.