Increasing the price of tobacco products by raising tobacco excise taxes is recognized widely—including by the World Health Organization— as the single most effective policy for reducing tobacco use. Put simply, higher prices typically lead to decreased consumption. However, the affordability of tobacco products matters more than the price alone because changes in household income and/or inflation also affect people’s ability to buy any product. In fact, affordability may increase even when prices are going up— if income growth is greater than the price increases— thereby causing tobacco consumption to increase.
Previously, researchers have mostly used aggregate measures of affordability that provided population-level assessments, typically based on cigarette prices and crude per-capita income measures (“Relative income price” or RIP is a measure of the change in the proportion of income required to purchase a specific number of cigarettes). But new research on the affordability of tobacco products in Bangladesh led by Dr. Nigar Nargis from the American Cancer Society has improved on the typical aggregate measure of affordability by utilizing household-level income measures and examining the broader market of tobacco products. In Bangladesh, in addition to cigarette smoking, the use of small, hand-rolled tobacco products called bidi and smokeless tobacco is very common.
This research demonstrates that from 2009 to 2015, cigarettes and bidi became more affordable and smokeless tobacco remained as affordable. Greater affordability led to increases in consumption (particularly of cigarettes). The increase in affordability of tobacco products was even greater among less educated and lower socio-economic status people, who are not only more sensitive to price, but also more likely to smoke. Moreover, the combination of these two factors leads to widening health disparities. Finally, this advanced method of measuring affordability shows more clearly that it varies widely across the population owing to large variation in product type, price and household income. Bangladesh’s multi-tiered tax structure— which protects certain tobacco products from large price increases— adds further challenge to the effectiveness of tax increases in reducing affordability.
To reverse this troubling trend, there is need for tax and price increases across all tobacco products over and above both inflation and income growth, as well as the creation of a more uniform tax structure.
By Nigar Nargis
To read more, see Nargis N, Stoklosa M, Drope J, Fong GT, Quah ACK, Driezen P, Shang C, Chaloupka FJ, Hussain AKMG. Trend in the affordability of tobacco products in Bangladesh: findings from the ITC Bangladesh Surveys. Tobacco Control. Published Online First: 19 April 2018.