Prices and Cigarette Demand: Evidence from Youth Tobacco Use in Developing Countries

Deliana Kostova, Hana Ross, Evan Blecher, Sara Markowitz

NBER Working Paper No. 15781
Issued in February 2010
NBER Program(s):Children, Health Economics

This paper estimates the impact of cigarette prices on youth smoking in lower-income countries using data from the Global Youth Tobacco Survey (GYTS). Country-level heterogeneity is addressed with fixed effects and by directly controlling for confounding environmental factors such as local anti-smoking sentiment, cigarette advertising, anti-smoking media messages, and compliance with youth access restrictions. We find that cigarette price is an important determinant of both smoking participation and conditional demand. The estimated price elasticity of participation is -0.63. The likelihood of participation decreases with anti-smoking sentiment and increases with exposure to cigarette advertising. The estimated price elasticity of conditional cigarette demand is approximately -1.2. Neither anti-smoking sentiment, cigarette advertising, nor access restrictions have an impact on the intensity of smoking among current smokers, but exposure to anti-smoking media may reduce the number of cigarettes smoked.

Acknowledgments

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Document Object Identifier (DOI): 10.3386/w15781

Published: Deliana Kostova, Hana Ross , Evan Blecher, and Sara Markowitz. Is youth smoking responsive to cigarette prices? Evidence from low - and middle - income countries . Tobacco Control 2011; 20 : 419 - 424