The Effect of Cigarette Price Increase on Smoking

Smoking is a hard habit to break. It is also the leading cause of preventable death in the US. Its death toll is 438,000 deaths per year (American Lung Association, n.d.). Despite the various health risks posed on smokers, cigarette sales continue to rise. Governments around the world have implemented strict laws to curb smoking habit, but they hardly put a dent on smoking prevalence. Excise taxes on cigarette, graphic health ads, and health programs appear to do little to cause smoking cessation or to lower prevalence, at the very least. This essay looks at the effect of cigarette price increase on smoking and whether it is effective in restricting cigarette use.

There have been numerous studies that confirm the inverse relationship of cigarette prices and smoking. A significant finding of the study by Chaloupka et al. (2012) reveal that a 10% increase in cigarette price results in a 4% reduction in overall cigarette consumption. This is evidence that the law of supply and demand is at work. While this appears to be a great way to curtail demand for cigarette, the problem is that this just basically lowers demands. There’s no indication that a reduction in demand for cigarettes actually drive people to quit the dangerous habit.

According to the Society for the Study of Addiction (SSA), research studies that investigate the impact of cigarette prices on smoking prevalence and intensity reveal that, in general, about half of the price impact on total demand results from the decrease in the number of smokers. It means the higher prices not only cuts down the number of smokers, but also discourages young people to start smoking (SSA, 2015).

Another interesting study by Curti et al. (2014) shows that a 10% percent increase in the price of cigarette corresponds to a 4.6% increase in the consumption of roll-your-own (RYO) cigarettes. This means that smokers are turning to alternatives to avoid paying higher prices. With the emergence (and popularity) of electronic cigarettes (e-cigarettes), it would not be surprising to see a shift in demand for the alternatives including illegally procured tobacco.

Smuggled tobacco is even more dangerous because it is unregulated. As such, the components may include arsenic, rat droppings, and lethal amounts of tar and carbon monoxide (Campbell, 2010). This effect is far worse than the problem that governments are trying to fix in the first place. When it adds illegality and crime in the equation, it becomes a much more complex problem and more difficult to control.

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