cigarette tax and public health (impuestos al tabaco y prevalencia de fumadores) - k martire y otros

Cigarette tax and public health: what are theimplications of financially stressed smokers for theeffects of price increases on smoking prevalence?add_3174 622..630

Kristy A. Martire1, Richard P. Mattick1, Christopher M. Doran1 & Wayne D. Hall2

National Drug and Alcohol Research Centre, University of New South Wales, Sydney, NSW,Australia1and University of Queensland Centre for Clinical Research,University of Queensland, Herston, QLD, Australia2

ABSTRACT

Aims This paper models the predicted impact of tobacco price increases proposed in the United States and Australiaduring 2009 on smoking prevalence in 2010 while taking account of the effects of financial stress among smokers oncessation rates. Methods Two models of smoking prevalence were developed for each country. In model 1, prevalencerates were determined by price elasticity estimates. In model 2 price elasticity was moderated by financial stress. Eachmodel was used to estimate smoking prevalence in 2010 in Australia and the United States. Results Proposed priceincreases resulted in a 1.89% and 7.84% decrease in smoking participation among low socio-economic status (SES)groups in the United States and Australia, respectively. Model 1 overestimated the number of individuals expected toquit in both the United States (0.13% of smokers) and Australia (0.36% of smokers) by failing to take account of thedifferential effects of the tax on financially stressed smokers. The proportion of low-income smokers under financialstress increased in both countries in 2010 (by 1.06% in the United States and 3.75% in Australia). Conclusions Theinclusion of financial stress when modelling the impact of price on smoking prevalence suggests that the populationhealth returns of increased cigarette price will diminish over time. As it is likely that the proportion of low-incomesmokers under financial stress will also increase in 2010, future population-based approaches to reducing smokingwill need to address this factor.

Keywords Financial stress, price elasticity, smoking cessation, social determinants of health, taxation, tobacco.

Correspondence to: Kristy Martire, National Drug and Alcohol Research Centre, University of New South Wales, Sydney, NSW, 2052, Australia.E-mail: [email protected] 11 January 2010; initial review completed 12 May 2010; final version accepted 19 August 2010

INTRODUCTION

Cigarette smoking is the largest single cause of pre-ventable mortality and morbidity world-wide. In 2000approximately 4.8 million deaths were attributable tosmoking globally [1], with 450 million global fatalitiesprojected for the period from 2000 to 2050 [2].

Tobacco taxes have long been advocated as a way toreduce smoking. Federal tax was increased by 15% on theaverage pack price in the United States (USA) in 2009 andadditional mean increases of around 34% were proposed(although not necessarily enacted) in 23 states [3].Similarly, a continuation of existing Australian tobaccopolicy is expected to reduce smoking prevalence fromthe current 17.9% to 12.7% by 2020 [4]. It has been

proposed that this prevalence can be reduced to 9% byintroducing, among other things, a 49% increase in theaverage price per stick (from $AUD 0.45 to $AUD 0.67)[5].

The evidence regarding the impact of tobacco priceincreases on smoking prevalence was summarized in a2003 meta-analysis of tobacco price elasticity [6]. Basedon data from 86 studies the average price elasticity was-0.48 (range -3.12 to 1.41), with just over half thiseffect on smoking participation rates [7]. This suggeststhat a 10% increase in tobacco price would result in 2.4%fewer smokers. Despite evidence that increased price is aneffective way of reducing smoking prevalence [2,8], con-cerns have been raised about the impact of this policy onsocial equity [9–11]. In most high-income countries, as

RESEARCH REPORT doi:10.1111/j.1360-0443.2010.03174.x

© 2010 The Authors, Addiction © 2010 Society for the Study of Addiction Addiction, 106, 622–630

in low- and medium-income countries, smoking is moreprevalent among those in a lower socio-economic posi-tion as measured by income, occupation or education[11–16]. This raises the possibility that increased tobaccotaxes are regressive [9,17]. That is, unless tax burdens areroughly equal across socio-economic strata before atobacco tax increase, and more low socio-economic status(SES) smokers quit in response to price rises, the increasewill impose a disproportionate financial burden on themost disadvantaged sectors of the community.

Evidence on the relative price elasticity of low andhigh SES smokers is unclear. Thomas et al.’s [18] system-atic review of the impact of population tobacco controlinterventions on social inequalities in smoking concludedthat tobacco price manipulations reduced the socialgradient in smoking—a view endorsed by many [19–23].Others disagree. Regidor and colleagues [10], forexample, highlighted methodological and interpreta-tional problems in four of six key papers reporting greaterprice sensitivity among low SES smokers [23–26], andcite an equivalent number of studies reporting conflictingevidence [20,27–29].

One factor which may account for variations inempirical results is financial stress among low SESsmokers: an inability to pay for essential goods and ser-vices because of a shortage of money [30–33]. Whilefinancial stress is more prevalent among lower SESsectors, it is not confined to this group [31]. Internationaldata from a prospective survey conducted in the UnitedStates, United Kingdom, Canada and Australia [32]revealed that smokers under financial stress (regardless ofSES) were 26% less likely to make a quit attempt (95% CI:4–43%). They also had success rates 48% lower thanthose who were not under financial stress [95% confi-dence interval (CI); 18–67%]—even though reportinggreater motivation to quit. These data suggest that finan-cial stress may moderate the association between SESand price elasticity and explain the conflicting findingsin the literature.

Little explicit consideration has been given to theimpact of financial stress on the efficacy of raisingtobacco price. In this paper we use modelling to explorethis issue using US and Australian smoking prevalencedata. Both countries have advanced tobacco control poli-cies that have reduced smoking prevalence among adultsto 20% or less, and in both public health advocates haverecently proposed that taxes on smoked tobacco beincreased substantially to reduce smoking prevalencefurther.

METHOD

We constructed two simple models for each countryto explore the possible impacts of the proposed price

increases in Australia or the United States on smokingprevalence in 2010. In the first model for each country, aone-time price increase was introduced that was equal tothe proposed tax increase. No allowance was made in thismodel for any effects of financial stress. In the secondmodel we included its probable effects. The inputs anddata used to build the models are summarized inTables 1 and 2.

The models draw upon smoking prevalence datafrom the Centres for Disease Control (CDC) in the UnitedStates and the Australian Institute of Health and Welfare[34]. There were an estimated 18 874 896 low-incomesmokers in the United States (18 years+) in 2006 and3 425 671 in Australia (14 years+) based on data from2008. Price elasticity estimates were -0.11, -0.06and -0.02 for low-, middle- and high-income smokers,respectively, in the United States in 2006 [35], and -0.32,-0.04 and -0.02 for low-, middle- and high-incomesmokers in Australia, respectively [30]. Around 15% ofsmokers (15.9% in the United States and 13.5% in Aus-tralia) reported financial stress in the past month, i.e. theyreported that: ‘in the last month, because of shortageof money, were you unable to pay any important billson time, such as electricity, telephone or rent bills’. Halfthese (49.7%) fell into the low-income group [32].

In model 1, US smokers were subject to a 34.3% priceincrease (see Table 3) and Australian smokers to a 49%price increase (see Table 4)—reflecting the size of the pro-posed increases in each country [example calculation:US low-income (LI) percentage decline in participation(-1.89) = participation elasticity (-0.11/2) ¥ percentageprice increase (0.343)]. In model 2, irrespective ofcountry, smokers under financial stress were assumed tobe 26% less likely to make a quit attempt than in model 1,and to be 48% less likely to succeed [32] [example calcu-lation: US LI financially stressed percentage decline inparticipation (-0.73) = (percentage decline in participa-tion (-1.89) ¥ inverse of attempt rate (0.74) ¥ inverse ofsuccess rate (0.52)].

Sensitivity analyses were also conducted using the95% CIs of the decrease in attempt (4–43%) and successrates (18–67%) for stressed smokers compared to non-stressed smokers, as reported by Siahpush et al. [32]. Thelower limit (LL) estimate of the impact of financial stressfor our models is therefore based upon smaller differencesbetween quit attempt and success rates for stressed andnon-stressed smokers (4% lower quit rate and 18%lower success rate compared to non-stressed smokers).The upper limit (UL) or least conservative estimate of theimpact of financial stress uses the larger estimate of thedifference in quit and success rates for stressed and non-stressed smokers (43% lower quit rate and 67% lowersuccess rate compared to non-stressed smokers). Accord-ingly, the actual percentage decline in participation

Cigarette tax and financial stress 623


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SES:

soci

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624 Kristy A. Martire et al.


Tabl

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Tabl

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69

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30

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dle-

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me

no

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98

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91

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81

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01

50

.94

Wit

hfin

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15

92

36

(4.6

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60

01

58

63

6H

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-in

com

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ofin

anci

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36

67

96

-0.4

91

79

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64

99

80

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Wit

hfin

anci

alst

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72

47

6(2

.1%

ofC

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-0.1

91

37

72

34

0



associated with price increases for those under financialstress is likely to fall between -1.58 and -0.35 for thosewith low income in the United States [example calcula-tion: LL US LI financially stressed percentage decline inparticipation (-1.58) = (percentage decline in participa-tion (-1.89) ¥ inverse of LL attempt rate (0.96) ¥ inverseof LL success rate (0.82)].

RESULTS

Model 1 (M1) suggested that the proposed price increaseswould reduce smoking in the United States by approxi-mately 1.89% in the low-income group {example calcu-lation: [estimated total quitters LI (356 075)/currentsmokers LI (18 874 896)] ¥ 100}, 1.03% in the middle-income (MI) group and 0.34% in the high-income (HI)group. Smoking rates in Australia were estimated todecrease by 7.84%, 0.98% and 0.49% for low-, middle-and high-income smokers, respectively. For both coun-tries, these results are consistent with Thomas et al.’s [18]claim that increasing the tobacco price reduces socialinequalities in smoking.

The results of model 2 (M2), however, are different.Failing to take into account the effects of financialstress overestimates the impact of price increases onsmoking participation by 50 441 [estimated total persis-ters M2 (37 753 505)—estimated total persisters M1(37 703 064)] smokers in the United States (c2

1 = 1.43,P < 0.0005) and 12 226 (3 348 876–3 336 650)smokers in Australia (c2

1 = 923.67, P < 0.0005). Thesefigures represent 0.13% of smokers in the United Statesand 0.36% in Australia.

Sensitivity analyses applying the 95% CIs on quitattempt and quit success rates for financially stressedsmokers resulted in model 1 overestimating the impactof the price increase on smoking prevalence by between0.04% and 0.17% of the US smoking population and0.10% and 0.47% of the Australian smoking population.See Tables 5 and 6.

The overestimation of quitting by model 1 was moremarked for low-income than high-income groups in boththe United States (total percentage decrease in smokersLI, M1 - M2 = 0.19%, 95% CI: 0.05–0.25%; total per-centage decrease in smokers HI, M1 - M2 = 0.01%, 95%CI: 0.00–0.02%) and Australia (LI, M1–M2 = 1.20%,95% CI: 0.35–1.74%; HI, M1 - M2 = 0.05%, 95% CI:0.01–0.07%). This reflects the fact that financial stress ismore prevalent in lower-income groups.

Model 2 also predicted that the proportion of smokersin the most disadvantaged group who were under finan-cial stress would increase. The proportion of financiallystressed low-income smokers increased from 16.02%to 16.19% in the United States in 2010 [examplecalculation: estimated total LI persisters with financial Ta

ble

5M

odel

2w

ith

low

er(L

L)an

du

pper

limit

s(U

L)of

the

impa

ctof

finan

cial

stre

ssU

SA2

01

0.

US

popu

lati

on1

8+

year

sC

urre

ntsm

oker

popu

lati

on%

Dec

line

inpa

rtic

ipat

ion

Est

imat

ednu

mbe

rof

quit

ters

20

10

Est

imat

ednu

mbe

rof

pers

iste

rs

Est

imat

edto

tal%

decr

ease

insm

oker

sLL

:UL

Est

imat

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talq

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ers

(per

sist

ers)

LL:U

L

Low

inco

me

no

finan

cial

stre

ss1

58

49

81

6-1

.89

29

90

07

15

55

08

09

1.8

4:1

.64

46

06

88

:40

76

31

(37

71

65

76

:37

76

96

33

)LL

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ress

30

25

08

0-1

.58

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47

66

3:1

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35

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77

41

7:3

01

43

46

Mid

dle-

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me

no

finan

cial

stre

ss5

46

51

54

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35

62

36

54

08

91

80

.98

:0.8

0LL

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ress

21

03

13

4-0

.86

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18

07

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12

08

50

59

:20

99

06

3H

igh

-in

com

en

ofin

anci

alst

ress

10

80

68

38

-0.3

43

69

65

10

73

98

73

0.3

4:0

.32

LL:U

Lw

ith

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cial

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ss9

57

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89

54

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56

62

5



stress (3 003 120)/estimated total LI persisters(18 553 929)]—an increase of 1.06% on 2009 levels(c2

1 = 174.83, P < 0.0005). This modelled trend wasmore evident in Australia, with the proportion of low-income smokers reporting financial stress increasingfrom 27.28% to 28.30% in 2010—an increase of 3.75%on 2009 levels (c2

1 = 211.86, P < 0.0005). Sensitivityanalyses using 95% CIs indicate that the proportion oflow-income smokers under financial strain in 2010 islikely to fall between 16.07 and 16.24% in the UnitedStates and 27.55–28.62% in Australia. Increases inthe proportion of smokers experiencing financial stresswere much smaller in high-income groups for eachcountry, with rates increasing by 0.16% and 0.30% com-pared with 2009 in the United States and Australia,respectively.

Across all income groups, in 2010, financiallystressed smokers were estimated to represent approxi-mately one in seven to eight smokers in the United States{example calculation: [estimated LI, MI and HI persis-ters with financial stress (3 003 120 + 2 094 806 +955 979)/estimated total persisters (37 753 505)] ¥100 = 16.04%} and Australia (13.53%).

In summary, the modelled effects of a tobacco tax arenot regressive when using simple price elasticity esti-mates that ignore financially stressed smokers. Whenaccount is taken of the latter, tax increases imposea larger burden on low-income smokers than high-income smokers because of the higher prevalence offinancial stress in this segment of the smoking popu-lation. Criticisms of the equity of price-based inter-ventions for smoking prevalence are supported by theresults of the modelling which assumed differentialresponses to tax rises among stressed and non-stressedsmokers.

DISCUSSION

The models presented here suggest that the priceincreases proposed in the United States and Australia willreduce smoking prevalence in both countries. Smoking inlow-income groups will decrease by almost 2% in theUnited States and almost 8% in Australia in 2010. Theextent of these decreases is contingent upon the accuracyof the price elasticity estimates applied in the model andthe extent to which these estimates already incorporatethe effects of financial stress. If financially stressedsmokers are less sensitive to price increases, there will besmaller reductions in smoking prevalence.

The inclusion of financial stress in the model reducedestimated cessation rates by 0.13% and 0.36% of theUS and Australian smoking populations, respectively. Ona global scale, financial stress may therefore preventbetween 271 700 and 752 400 of the estimated 209Ta

ble

6M

odel

2w

ith

low

er(L

L)an

du

pper

limit

s(U

L)of

the

impa

ctof

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cial

stre

ssA

ust

ralia

20

10

.

Aus

tral

ian

popu

lati

on1

4+

year

sC

urre

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oker

popu

lati

on%

Dec

line

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rtic

ipat

ion

Est

imat

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ters

20

10

Est

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pers

iste

rs

Est

imat

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tal%

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ease

insm

oker

sLL

:UL

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imat

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ers

(per

sist

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LL:U

L

Low

-in

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en

ofin

anci

alst

ress

61

06

30

-7.8

44

78

73

56

27

57

7.4

9:6

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85

74

6:7

28

86

(33

39

92

5:3

35

27

85

)LL

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ress

22

90

40

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40

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63

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94

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19

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01

50

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ress

15

92

36

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15

79

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66

79

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24

10



million smokers in high-income countries from quitting[36]. The 95% CI on this estimate suggests that the prob-able figure is no less than 83 600 and no more than982 300 smokers. Moreover, the number of smokers per-sisting due to financial strain would increase by 1.2–3.3million smokers (95% CI: 369 200–4 338 100) if thesame trend was found in low- and middle-income coun-tries [37]. These estimates are substantial even at thelower thresholds of the sensitivity analyses presented.

While the importance of reductions in smokingprevalence of the kind observed in this exercise areclearly important, the models constructed here beginto explore quantitatively the negative effects of financialstress on the efficacy of increasing tobacco price.Although the number of low SES smokers decreasedin both models, the proportion of smokers underfinancial stress was greater in lower-income groups.This resulted in a greater discrepancy between models 1and 2 for low- than high-income quitters in both theUnited States and Australia. This raises a significantequity concern.

The modelling results are also consistent with thehypothesis that financial stress may, in part, account forthe divergent price elasticity estimates for smokers ofvarying income and socio-economic levels. Specifically, ifSES is confounded by financial stress, then the higherprevalence of smoking in low SES groups will reflect theirhigher rates of financial stress, which will depress priceelasticity estimates.

The models also suggest that the characteristics ofsmokers in both the United States and Australia willchange over time, with the proportion of low-incomesmokers who are under financial stress increasing by anestimated 1.06% in the United States and 3.75% in Aus-tralia in 2010. This trend is likely to continue over time,and suggests that although the smoking population willdecrease into the future, an increasing proportion ofthese smokers will be affected by financial stress.

The effect of financial stress on responses to priceincreases highlights two important issues. First, althoughthe effects of price increases are positive for the smokingpopulation as a whole, the lower quit rates amongsmokers experiencing financial stress cannot be ignored.Instead, policy makers need to interrupt the negativelyreinforcing cycle of smoking and financial stress [33,37].One approach would be to provide free or subsidizedsmoking cessation resources (e.g. nicotine replacementtherapy) to reduce the economic burdens borne by finan-cially stressed smokers and facilitate quitting. Secondly, tothe extent that our models reflect accurately real-worldprocesses, these results indicate that there will be dimin-ishing returns from raising tobacco prices as the propor-tion of the remaining smokers who experience financialstress increases.

Both these issues can potentially be addressed bydeveloping more effective interventions for financiallystressed smokers. It is these smokers in particular whoare being left behind by current population level price-based approaches and who will represent an increasingproportion of the smoking population of the next decade.

Limitations

The projections derived in this paper estimate of theimpact of financial stress on the efficacy of increasingprice as a strategy for reducing smoking prevalencein two high-income countries. The models and resultsreported are illustrative rather than descriptive, in thatthey assume static populations of smokers and socio-economic groups and do not include any impacts of priceon new smokers, natural quit rates or price-elasticityitself. In addition, some of the parameters required tobuild the model were derived from different data sources,introducing overlap at some category thresholds (e.g. thedefinitions of ‘low-’, ‘middle-’ and ‘high’-income groupsvary across smoker and financial stress distributions inboth the US and Australian models). A more complexmodel using parameter estimates derived from commondata sources, that removed the variability at categorythresholds, may produce a more precise description of theinter-relationships between tobacco interventions, initia-tion and prevalence in the United States and Australia.Finally, the estimates of the impact of financial strain onsmoking cessation used here are derived from only onesource [32]. Although this reflects the current limitationsof the literature, it has implications for the reliability ofthe models created and the robustness of the conclusionsreached. We have attempted to address this limitation byconducting a sensitivity analysis based upon the 95% CIssurrounding the quit and success rates for financiallystressed smokers. The results of these analyses demon-strate that, even at the lower limit of the probable realvalue, the failure to consider the implications of financialstress overestimates the benefits of raising the price ofsmoked tobacco.

Despite the potential limitations, the models representan important first attempt to estimate the interactionsbetween financial stress and the effects of price increaseson population smoking prevalence. Our estimates shouldprompt further research to inform policy debates moreclearly about how to reduce smoking prevalence whilereducing the socio-economic gradient in smoking.

CONCLUSIONS

The proposed increases in tobacco taxes in the UnitedStates and Australia during 2009 have the potential todecrease the prevalence of smoking in 2010 across all



income levels, particularly among lower socio-economicgroups. However, it is also possible that financial stressamong lower SES smokers may reduce the impact of priceincreases on cessation in these countries. If so, the pro-portion of smokers who are under financial stress willincrease along with price, indicating the importance ofattending to equity concerns when increasing tobaccoprices. Future population-level approaches to reducingsmoking prevalence need to be sensitive to the barriers tocessation for this group if the rate of decline in smokingprevalence is to increase over the next decade.

Declarations of interest

None.

Acknowledgements

Wayne Hall is supported by an NH&MRC AustraliaFellowship.

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cigarette tax and public health (impuestos al tabaco y prevalencia de fumadores) - k martire y otros

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