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THE DEMAND FOR TOBACCO PRODUCTS AT HOUSEHOLD LEVEL IN PAKISTAN
Submitted by: Hira Qasim
Supervisor: Dr .Mehmmood Khalid Co-Supervisor: Mr. Ajmal Jahangeer
Department of Health Economics
20th Nov 2015
o The tobacco consumption is possible by two ways, smoking and chewing.
o Globally the use of tobacco especially the cigarette consumption has been increasing
rapidly since the cigarettes were manufactured at the beginning of 20th century.
o Tobacco use in Pakistan is common and one of the highest in South East Asian
region (WHO report , 2013).
o Among few countries of the world, Pakistan is one where smokeless tobacco (chew
and raw tobacco) is widely consumed ( 2014 Global Report).
o The dilemma of tobacco consumption is prevailing around the globe but the ratio of
this habit is altered among different nation’s i.e. developing and developed
countries.
The numbers of tobacco consumers are rising and will rise due to the rise in
population in the world (WHO, 2002).
The use of tobacco is leading preventable cause of death in high income countries
where as in low and middle income countries it is increasing day by day (WHO report
2011).
According to WHO 2011 report 32.4% males and 5.7% females are current tobacco
smokers in Pakistan.
According to Coalition for Tobacco Control Pak (CTC), there are 22 million smokers
in the country and 55% of the households have at least one individual who smokes
tobacco.
In Pakistan 1.8% females consumed any smoked tobacco and 4.6% used any
smokeless tobacco daily or some days of a week. The large proportion of males was
current smokers as 15.2% and among females it was less by 0.4 %( Gilani and Leon,
2012).
Source: Sreeramareddy et al, (2014)
This study explores the effects of price of tobacco products on the demand
for tobacco products in Pakistan.
Another objective of this study is to investigate the relationship of the
demand for tobacco in terms of different income levels in Pakistan.
The socio-economic and demographic determinants of tobacco use in
Pakistan.
The study tests the following null hypotheses:
There is no association of price with tobacco consumption.
There is no difference in tobacco consumption by income levels of
households.
There is no difference in tobacco consumption between educated and
uneducated households.
Presence of adult males and location in urban areas have no association
with tobacco consumption.
Other Socio-economic and demographic variables influence the tobacco
consumption decisions.
The tobacco expenditure is one of the major, especially in cigarette form, portrayed
health issues.
No research is conducted yet simultaneously with the determinants of tobacco
consumption expenditures and the elasticities in the same are not studied at national
level including all four provinces.
Not only poor consume various forms of tobacco but households who have higher
economic status consume more tobacco than lower economic group households.
Different tobacco forms are price responsive in Pakistan and taxation could be used
as a possible tool of regulating tobacco consumption in Pakistan.
.
• The literature review confirms inverse relationship between prices of tobacco products and tobacco consumed.
• Selvaraj.S , Karan.A , Srivastava.S found in India regarding price elasticity of major tobacco products (cigarettes, bidi and leaf tobacco) by income quintiles. They followed the theoretical framework developed by Deaton (1988-1997).
• Rijo M John has also found that own-price elasticity estimates of different tobacco products in India ranged between −0.4 to −0.9, with bidis (an indigenous hand-rolled smoked tobacco preparation in India) and leaf tobacco having elasticities close to unity.
• Another study reflects on the price elasticity of tobacco and shows that, cigarettes prices are an important factor of demand for smoking as well as of smoking participation. According to this study, estimated price elasticity was found -0.63 (kostova et al. 2012).
• Another Study in India has revealed that We find that a
10% increase in bidi prices would reduce the demand for
bidis by about 6 to 9.5% ( Jha et.al, 2011).
• Ali Khan Khawaja and Muhammad Masood Kadir,
(2004) found in their study that, there is no association
between smoking status and different income group.
• Another study revealed that, the 10% increase in
cigarettes prices leads to 4.8% decrease in cigarettes
consumption in Pakistan (Mushtaq N, Mushtaq S, and
Beebe LA, 2011).
Data
• Pakistan Social Living Standards Measurements (PSLM) survey (2010-
2011)
•
• The survey is conducted by Federal Bureau of Statistics and provides
information on 16341 households located across Pakistan. .
• The data provides information on household characteristics and
consumption of various food and non-food items including tobacco
products.
Does not provide direct information of prices of tobacco
products
Specific diseases due to tobacco consumption cannot be
estimated
No information on tobacco spending at individual level,
hence individuals characteristics can not be included in
the model/analysis.
Unit of Analysis: Household
Descriptive analysis: uni-variate and bi-variate analysis,
Linear regression ( Ordinary Least Square )
Categories of Tobacco Products
• Cigarettes and Bidi,
• Chew and raw tobacco
• Pan prepared
• Choona khatta and supari etc.
Total /Average Tobacco Expenditures along with socio-economic
determinants
Dependent Variable : Household consumed tobacco Independent Variables: Age & gender of head of household Number of Adult males in the household Number of Adults in the household Number of youth in the household Education of the head of the household Work status of head of household Household income Illness of the head of the household Region Province
Linear regression technique is used to investigate determinants of tobacco consumption.
Price Elasticity of Demand
% change in quantity demand of a product / % change in
price of a product
Income Elasticity of Demand
% change in quantity demand of a product / % change in
income of a product
• The unit values i.e. prices which have been calculated to estimate
the price elasticities for tobacco products, followed Deaton Model
(1997).
• The unit values of each tobacco product namely (Bidi, cigarettes,
raw tobacco and pan) are used as proxy for their prices.
• The formula of unit values:
VU= V ( Values) / Quantities (Q)
• Unit Prices of Q1 ( Quantities consumed and Purchased) in the data.
Conventional Demand Model : Double Log demand model --known as log-log or log linear form Linear Regression
Own Price Elasticity is the price elasticity of demand (commonly
known as just price elasticity) measures the rate of response of quantity demanded due to a price change.
The formula for the own price elasticity of demand (OPEoD) is:
OPEoD = Total % Change in Quantity Demanded Total % Change in Price
Data Findings
Tobacco
Users
households,
7422 (45.4%)
Non-Tobacco
Users
households,
8919
(54.6%)
Total
Households,
16341
(100.0%)
Demographic and Socio- Economic Profiles of Tobacco
Consumers
97.3%
2.7%
Percentage Distribution of Tobacco
Consumers by Gender
Male
Females
7.2
35.1
37.5
20.1
0
5
10
15
20
25
30
35
40
15-29 30-44 45-59 60 +
Percentage Distribution of Tobacco users by Age Groups
50.4
15.8
23.1
4.5 3.9 1.8
0.4
0
10
20
30
40
50
60
No Education Primary Middle Secondary Intermediate Higher education Others
Percentage Distribution of Tobacco users by Educational
Status
18.4
20.8
22.1
19.9
18.8
Poorest Poorer Middle Richer Richest
Percentage Distribution of Tobacco users by Income
Groups
Non-Working
15%
Working
85%
Percentage Distribution of Tobacco users by working and
non working status
Household's characteristics
Expenditures on cigarettes ,Bidi
and lighters
Expenditures on chew
tobacco and tobacco raw
Expenditures on
pan prepared
Expenditures on choona
,khaata and supari etc
Average Tobacco
Expenditures
Gender of the head
Males 343 56 14 26 439
Females 209 74 9 24 316
Age of the Head
15-29 294 43 17 28 382
30-44 334 44 11 25 414
45-59 358 57 15 28 458
60 and more 332 83 15 24 453
Chi- Square of Gender = 1.0, Chi- Square of Age = 0.04
Average Tobacco Consumption Expenditures per annum (in Rupees) by
Age and Gender
Household's characteristics
Expenditures on cigarettes and
lighters
Expenditures on chew tobacco and
tobacco raw Expenditures on
pan prepared
Expenditures on choona ,khaata
etc Average Tobacco
Expenditures
0 90 91 0 0 181
1-2 277 46 15 29 367
3-4 350 53 12 25 440
5 and more 393 75 14 25 507
Average Tobacco Expenditures by Numbers of Adult
Household's characteristics
Expenditures on cigarettes and
lighters
Expenditures on chew tobacco and
tobacco raw Expenditures on
pan prepared
Expenditures on choona ,khaata
etc Average Tobacco
Expenditures
1-2 292 40 12 23 366
3-4 310 53 14 27 404
5 and more 399 71 14 27 511
Household's
characterist
ics
Expenditure
s on
cigarettes,
Lighters
and Bidi
Expenditure
s on chew
tobacco and
tobacco raw
Expenditure
s on pan
prepared
Expenditure
s on choona
,khaata and
Supari etc
Average
Tobacco
Expenditure
s
0 319 48 11 25 403
1-2 323 56 15 27 420
3-4 395 70 13 25 503
5 and more 414 70 21 40 544
Household's
characteristics
Expenditures
on cigarettes,
lighters and
Bidi
Expenditures
on chew
tobacco and
tobacco raw
Expenditures
on pan
prepared
Expenditures
on choona
,khaata and
Supari etc
Average
Tobacco
Expenditures
Punjab 365 61 8 3 437
Sindh 407 11 31 75 524
Khyber
Pakhtunkhwa
85 145 0 1 231
Baluchistan 455 29 7 13 504
Household's
characteristics
Expenditures
on cigarettes,
lighters and
Bidi
Expenditures
on chew
tobacco and
tobacco raw
Expenditures
on pan
prepared
Expenditures
on choona
,khaata and
Supari etc
Average
Tobacco
Expenditures
Rural 335 70 6 18 428
Urban 348 33 27 41 450
Household's
characteristic
s
Expenditures
on cigarettes,
lighters and
Bidi
Expenditures
on chew
tobacco and
tobacco raw
Expenditures
on pan
prepared
Expenditures
on choona
,khaata and
Supri etc
Average
Tobacco
Expenditures
No education 305 68 10 21 403
Primary 371 49 12 28 460
Secondary 345 51 18 26 439
Middle 404 31 21 49 506
Intermediate 457 28 26 52 564
Higher
education
464 20 36 55 575
Others 781 32 1 0 815
Household's
characteristic
s
Expenditures
on cigarettes
and Bidi
lighters
Expenditures
on chew
tobacco and
tobacco raw
Expenditures
on pan
prepared
Expenditures
on choona
,khaata and
Supari etc
Average
Tobacco
Expenditures
Poorest 221 61 6 15 303
Poor 290 52 8 23 373
Middle 329 54 12 30 425
Rich 378 57 20 28 482
Richest 483 60 22 35 600
Average Unit values/Prices of Tobacco Products by Income
Quintiles
Regression Results
Ordinary Least Square Regression of the Determinants
of Total Tobacco Expenditures
Own Price and Income Elasticities of Cigarettes and Bidi
Explanatory Variables Beta Coefficients T values Significant values
Male Head 1 -0.21 -0.81 0.42
Age (in complete years) 0.00 0.25 0.81
Square of head age -1.69 -0.10 0.92
Number of Adults in the
household 0.09 2.38 0.02**
Number of Adult Males in
the household -0.01 -0.40 0.69
Number of youth in the
household -0.05 -1.22 0.22
Primary 2 0.09 0.88 0.38
Middle2 -0.03 -0.35 0.73
Secondary2 -0.20 -1.73 0.09***
Intermediate2 -0.06 -0.42 0.68
Higher Education2 -0.35 -1.84 0.07***
Others2 -1.01 -1.44 0.15
worked status 3 0.07 0.59 0.56
illness in household 4 -0.13 -2.01 0.05**
Log of the unit price of
cigarettes and Bidi -0.29 -3.14 0.00*
Log of the Income Level 0.06 0.79 0.43
Urban 5 -0.13 -1.54 0.13
Sindh 6 0.05 0.47 0.64
Khyberpakhton 0.34 0.47 0.64
Baluchistan -0.416 -3.07 0.002**
Constant 3.06 3.51 0.0*
The tobacco consumption is mostly done by males than the females and
there was a negative association between age and tobacco consumption.
The tobacco expenditures on cigarette, lighters and bidi are high among all socio
economic and demographic determinants than other tobacco products.
The demand for cigarettes and bidi is price inelastic, chew tobacco is price elastic
and pan is inelastic, but the demand for pan is more inelastic than cigarettes and
bidi.
The income elasticitiy of pan is highly inelastic than the other tobacco products.
The policy legislators have implemented the laws on tobacco use but still there
needs to take more policy actions.
There should be an increase in the price of Pan, Gutka and chalia as well.
The advertisement for tobacco use losses should be enhanced. There should not
only be a picture on the cigarette packs but banners of the same should also be
placed in public places as well.
There should be strict vigilance on the supply of tobacco products in all public
areas.
There should be a strict pricing policy on cigarette consumption; as a result
cigarette consumption could be reduced not only among higher income groups but
in lower income group as well.
There should be a direct taxation imposition on the tobacco industries,
It should be carried out with an individual perspective, which will be covered by the
analysis on all individuals in the households.
This study could be further enhanced by analyzing the estimations of price and
income elasticities for income quintiles .
The analysis could be done separately at provincial and regional level in Pakistan.
The research deals with the various factors but it neglected the tobacco related
diseases, so there should some effort in reporting the diseases.
Selvaraj.S , Karan.A , Srivastava.S, 2009-2010. Price Elasticity of Tobacco Products among Quintile Groups in India, 2009-10
Ali Khan Khawaja and Muhammad Masood Kadir, 2004. Smoking among adult males in urban community of Karachi, Pakistan. The Aga Khan University Karachi.vol 35(4).
Burki et.al, 2013. The Economies of Tobacco and Tobacco Taxation in Pakistan. Coalition for Tobacco Control Pak, http://ctcpak.org/ . Deaton, AS (1997). The Analysis of Household Survey. John Hopkins University
press for the World Bank Baltimore. Mushtaq N, Mushtaq S, and Beebe LA (2011). Economics of tobacco control in
Pakistan: Estimating elasticities of Cigarettes demand. Tobacco Control, 20(6), 431-5.
Riji M john (2008) . Price Elasticies estimates for tobacco products in India. Health policy plan.
World Health Organization. Tobacco or health: a global status report .WHO, 1997. Assessment of Economic Costs of Smoking. World Health Organization (2011).
Economics of Tobacco Toolkit. WHO/ World Health Statistics, (2013).
THANKS