Estimating the price elasticity of demand for cigarettes in South Africa using the Deaton approach.

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  • Additional Information
    • Source:
      Publisher: BMJ Publishing Group Ltd Country of Publication: England NLM ID: 101552874 Publication Model: Electronic Cited Medium: Internet ISSN: 2044-6055 (Electronic) Linking ISSN: 20446055 NLM ISO Abbreviation: BMJ Open Subsets: MEDLINE
    • Publication Information:
      Original Publication: [London] : BMJ Publishing Group Ltd, 2011-
    • Subject Terms:
      Commerce* ; Tobacco Products*; Elasticity ; Humans ; Smoking ; South Africa ; Taxes
    • Abstract:
      Objective: To estimate the price elasticity of demand for South Africa and thereby contribute to growing the evidence base of the likely impact of excise taxes on cigarette demand in low-income and middle-income countries.
      Methods: We employ the Deaton method, using wave 5 data from the South African National Income Dynamics Study, to estimate the cigarette price elasticity for South Africa. We used a sample of 6820 households.
      Results: Of the 6 820 households in the sample for which we had sufficient data, 1341 (19.7%) spent money on tobacco. The price elasticity of demand for cigarettes is estimated at -0.86 (95% CI -1.37 to -0.35), implying that the demand for cigarettes in South Africa declines by 8.6% for every 10% increase in price.
      Conclusion: The negative price elasticity estimate for South Africa indicates that increases in the excise tax are particularly effective in controlling cigarette consumption. However, given the presence of a significant illicit tobacco market in the country, it is important that authorities augment tax measures with strategies that curb the illicit trade in cigarettes.
      Competing Interests: Competing interests: None declared.
      (© Author(s) (or their employer(s)) 2021. Re-use permitted under CC BY. Published by BMJ.)
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    • Grant Information:
      MR/P027946/2 United Kingdom MRC_ Medical Research Council; C62640/A24723 United Kingdom CRUK_ Cancer Research UK
    • Contributed Indexing:
      Keywords: health economics; health policy; health services administration & management; international health services; public health
    • Publication Date:
      Date Created: 20211218 Date Completed: 20220222 Latest Revision: 20220222
    • Publication Date:
      20221213
    • Accession Number:
      PMC8685941
    • Accession Number:
      10.1136/bmjopen-2020-046279
    • Accession Number:
      34921069