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Nyagwachi AO, Chelwa G, van Walbeek C. The effect of tobacco- and alcohol-control policies on household spending patterns in Kenya: An approach using matched difference in differences. Soc Sci Med 2020; 256:113029. [PMID: 32464415 DOI: 10.1016/j.socscimed.2020.113029] [Citation(s) in RCA: 2] [Impact Index Per Article: 0.5] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Revised: 04/22/2020] [Accepted: 05/08/2020] [Indexed: 11/25/2022]
Abstract
This paper examines the effect of tobacco and alcohol control policies on tobacco and alcohol consumption patterns and the evolution of crowding-out effects on other household expenditure in Kenya. The current literature on crowding-out does not provide a defensible instrumental variable for a system of demand equations. This paper uses Matched Difference in Differences (MDID) as an alternative strategy and data from two nationally representative surveys in Kenya conducted ten years apart (2005/6 and 2015/16). We find that tobacco-control policies contributed to a decrease in the proportion of tobacco-consuming households between 2005 and 2015. Alcohol-control policies were only effective in reducing the proportion of alcohol-consuming households in the bottom quartile of the expenditure distribution. Overall, tobacco-consuming households spent less on education, communication, and some food items. Alcohol-consuming households also spent less on some food items, but expenditure on transportation was the only non-food item crowded out. Tobacco and alcohol control policies, when they result in reduced consumption of these products, can increase household expenditure on human capital development in the long run.
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Affiliation(s)
- Abel Otwori Nyagwachi
- Research Unit on the Economics of Excisable Products, School of Economics, University of Cape Town, Cape Town, South Africa; Parliamentary Budget Office, Nairobi, Kenya.
| | - Grieve Chelwa
- Graduate School of Business, University of Cape Town, Cape Town, South Africa
| | - Corné van Walbeek
- Research Unit on the Economics of Excisable Products, School of Economics, University of Cape Town, Cape Town, South Africa
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Masa-ud AGA, Chelwa G, van Walbeek C. Does tobacco expenditure influence household spending
patterns in Ghana?: Evidence from the Ghana 2012/2013
Living Standards Survey. Tob Induc Dis 2020; 18:48. [PMID: 32547351 PMCID: PMC7291959 DOI: 10.18332/tid/120936] [Citation(s) in RCA: 2] [Impact Index Per Article: 0.5] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Track Full Text] [Download PDF] [Journal Information] [Subscribe] [Scholar Register] [Received: 03/03/2020] [Revised: 04/19/2020] [Accepted: 04/21/2020] [Indexed: 11/24/2022] Open
Affiliation(s)
| | - Grieve Chelwa
- Graduate School of Business, University of Cape Town, Cape Town, South Africa
| | - Corné van Walbeek
- School of Economics, University of Cape Town, Cape Town, South Africa
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Chelwa G, Koch SF. The effect of tobacco expenditure on expenditure shares in South African households: A genetic matching approach. PLoS One 2019; 14:e0222000. [PMID: 31490996 PMCID: PMC6730990 DOI: 10.1371/journal.pone.0222000] [Citation(s) in RCA: 6] [Impact Index Per Article: 1.2] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [MESH Headings] [Grants] [Track Full Text] [Download PDF] [Figures] [Journal Information] [Subscribe] [Scholar Register] [Received: 10/17/2018] [Accepted: 08/20/2019] [Indexed: 11/19/2022] Open
Abstract
This paper examines whether tobacco expenditure leads to the crowding out or crowding in of different expenditure items in South Africa. We apply genetic matching to expenditure quartiles of the 2010/2011 South African Income and Expenditure Survey. Genetic matching is a more appealing approach for dealing with the endogeneity of tobacco expenditure that often plagues studies using systems of demand equations. Further, genetic matching provides transparent measures of covariate balance giving the analyst objective means of assessing match success. We find that the poorest tobacco consuming households in South Africa consistently allocate smaller budget shares towards food items than non-smoking households. Specifically, we find that dairy, fruits, nuts and oils are displaced in favour of tobacco expenditure in the two poorest quartiles. Unsurprisingly, food items are never displaced for households in the top two quartiles, given these households' greater access to resources. Like other studies in the literature, we find that tobacco expenditure consistently crowds-in alcohol across all quartiles confirming the strong complementarities between the two.
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Affiliation(s)
- Grieve Chelwa
- Graduate School of Business, University of Cape Town, Cape Town, South Africa
| | - Steven F. Koch
- Department of Economics, University of Pretoria, Pretoria, South Africa
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Abstract
OBJECTIVE To provide the first ever published estimates of the price and expenditure elasticities of demand for beer and wine in Vietnam and thereby contribute to policy initiatives aimed at reducing the excessive consumption of alcohol. METHODS We use a linear approximation of the Almost Ideal Demand System and data from the Vietnam Household Living Standards Survey for 2010, 2012 and 2014. RESULTS We find that the demand for beer and wine in Vietnam is price and expenditure inelastic with average price elasticities of -0.283 and -0.317 and average expenditure elasticities of 0.401 and 0.156, respectively. That is, we find that beer and wine consumption decline whenever their respective prices increase and their consumption increases whenever expenditure rises. CONCLUSIONS The results of the study lend confidence to calls for increased taxation of alcoholic products on public health grounds in Vietnam.
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Affiliation(s)
- Grieve Chelwa
- Graduate School of Business, University of Cape Town, Cape Town, South Africa
| | - Pham Ngoc Toan
- Invalids and Social Affairs, Ministry of Labour, Hanoi, Vietnam
| | | | - Le Thi Thu
- Healthbridge Foundation of Canada, Hanoi, Vietnam
| | | | - Hana Ross
- SALDRU Research Affiliate, University of Cape Town, Cape Town, South Africa
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Abstract
OBJECTIVE To provide the first published estimates of the price elasticity of demand for cigarettes in Uganda and thereby contribute to growing the evidence base of the likely impact of excise taxes on cigarette consumption and tax revenues in Sub-Saharan Africa. METHOD We use a linear approximation of the Almost Ideal Demand System along with expenditure data from the Uganda National Panel Survey and exploit the fact that prices of cigarettes vary across geographical space in Uganda. RESULTS We find that cigarettes are price inelastic in Uganda with elasticity estimates ranging between -0.26 and -0.33. That is, we expect that cigarette demand will decline by between 2.6% and 3.3% every time cigarette prices rise by 10%. These elasticity estimates are in line with international evidence and are robust to outliers in the data. CONCLUSION Our estimates of the price elasticity of demand for cigarettes suggest that the authorities in Uganda can reduce cigarette consumption and simultaneously increase tax revenues by increasing the excise taxes on cigarettes.
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Affiliation(s)
- Grieve Chelwa
- Graduate School of Business, University of Cape Town, Cape Town, South Africa
| | - Corne van Walbeek
- School of Economics, University of Cape Town, Cape Town, South Africa
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Stoklosa M, Goma F, Nargis N, Drope J, Chelwa G, Chisha Z, Fong GT. Price, tax and tobacco product substitution in Zambia: findings from the ITC Zambia Surveys. Tob Control 2018; 28:s45-s52. [PMID: 29574449 DOI: 10.1136/tobaccocontrol-2017-054037] [Citation(s) in RCA: 21] [Impact Index Per Article: 3.5] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Received: 09/09/2017] [Revised: 01/26/2018] [Accepted: 02/09/2018] [Indexed: 11/04/2022]
Abstract
BACKGROUND In Zambia, the number of cigarette users is growing, and the lack of strong tax policies is likely an important cause. When adjusted for inflation, levels of tobacco tax have not changed since 2007. Moreover, roll-your-own (RYO) tobacco, a less-costly alternative to factory-made (FM) cigarettes, is highly prevalent. DATA AND METHODS We modelled the probability of FM and RYO cigarette smoking using individual-level data obtained from the 2012 and 2014 waves of the International Tobacco Control (ITC) Zambia Survey. We used two estimation methods: the standard estimation method involving separate random effects probit models and a method involving a system of equations (incorporating bivariate seemingly unrelated random effects probit) to estimate price elasticities of FM and RYO cigarettes and their cross-price elasticities. RESULTS The estimated price elasticities of smoking prevalence are -0.20 and -0.03 for FM and RYO cigarettes, respectively. FM and RYO are substitutes; that is, when the price of one of the products goes up, some smokers switch to the other product. The effects are stronger for substitution from FM to RYO than vice versa. CONCLUSIONS This study affirms that increasing cigarette tax with corresponding price increases could significantly reduce cigarette use in Zambia. Furthermore, reducing between-product price differences would reduce substitution from FM to RYO. Since RYO use is associated with lower socioeconomic status, efforts to decrease RYO use, including through tax/price approaches and cessation assistance, would decrease health inequalities in Zambian society and reduce the negative economic consequences of tobacco use experienced by the poor.
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Affiliation(s)
- Michal Stoklosa
- Economic and Health Policy Research, American Cancer Society, Atlanta, Georgia, USA
| | - Fastone Goma
- School of Medicine, University of Zambia, Lusaka, Zambia
| | - Nigar Nargis
- Economic and Health Policy Research, American Cancer Society, Atlanta, Georgia, USA
| | - Jeffrey Drope
- Economic and Health Policy Research, American Cancer Society, Atlanta, Georgia, USA
| | - Grieve Chelwa
- Graduate School of Business, University of Cape Town, Cape Town, South Africa
| | - Zunda Chisha
- School of Economics, University of Cape Town, Cape Town, South Africa
| | - Geoffrey T Fong
- Department of Psychology, University of Waterloo, Waterloo, Ontario, Canada.,School of Public Health and Health Systems, University of Waterloo, Waterloo, Ontario, Canada.,Ontario Institute for Cancer Research, Toronto, Ontario, Canada
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Abstract
BACKGROUND South Africa has since 1994 consistently increased the excise tax on cigarettes to maintain a total tax burden of 50% (1997-2003) and 52% (after 2004) of the average retail selling price. Between 1994 and 2004, the real (inflation-adjusted) excise tax increased by 249%, and the average real retail price of cigarettes increased by 110%. In addition, advertising and smoking bans were implemented in 2001. These measures, which we collectively refer to as tax-led, coincided with a 46% decrease in per capita consumption of cigarettes. No evaluation of South Africa's tobacco control policies has created a counterfactual of what would have happened if the tax-led measures had not occurred. OBJECTIVE (1) To create a credible counterfactual of what would have happened to per capita cigarette consumption if the tax-led measures had not happened. (2) To use this counterfactual to estimate their impact on cigarette consumption in South Africa. METHOD We use a synthetic control method to create a synthetic South Africa, as a weighted average of countries (the 'donor pool') that are similar to South Africa, but that did not engage in large-scale tobacco control measures between 1990 and 2004. RESULTS Per capita cigarette consumption would not have continued declining in the absence of the tax-led measures that began in 1994. By 2004, per capita cigarette consumption was 36% lower than it would have been in the absence of the tax-led measures. These results, which we mostly attribute to tax increases, are robust to different specifications of the 'donor pool'. CONCLUSIONS Significant public health dividends can be obtained by consistently increasing the real tax on cigarettes.
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Affiliation(s)
- Grieve Chelwa
- Center for African Studies, Harvard University, Cambridge, Massachusetts, USA
- Southern Africa Labour and Development Research Unit, University of Cape Town, Cape Town, South Africa
| | - Corné van Walbeek
- Southern Africa Labour and Development Research Unit, University of Cape Town, Cape Town, South Africa
- School of Economics, University of Cape Town, Cape Town, South Africa
| | - Evan Blecher
- Southern Africa Labour and Development Research Unit, University of Cape Town, Cape Town, South Africa
- School of Economics, University of Cape Town, Cape Town, South Africa
- Department of Prevention of Noncommunicable Diseases, World Health Organization, Geneva, Switzerland
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Salloum RG, Goma F, Chelwa G, Cheng X, Zulu R, Kaai SC, Quah ACK, Thrasher JF, Fong GT. Cigarette price and other factors associated with brand choice and brand loyalty in Zambia: findings from the ITC Zambia Survey. Tob Control 2015; 24 Suppl 3:iii33-iii40. [PMID: 25631482 DOI: 10.1136/tobaccocontrol-2014-051878] [Citation(s) in RCA: 10] [Impact Index Per Article: 1.1] [Reference Citation Analysis] [What about the content of this article? (0)] [Affiliation(s)] [Abstract] [Key Words] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Received: 07/05/2014] [Accepted: 01/12/2015] [Indexed: 11/04/2022]
Abstract
OBJECTIVES Little is known about cigarette pricing and brand loyalty in sub-Saharan Africa. This study examines these issues in Zambia, analysing data from the International Tobacco Control (ITC) Zambia Survey. METHODS Data from Wave 1 of the ITC Zambia Survey (2012) were analysed for current smokers of factory-made (FM) cigarettes compared with those who smoked both FM and roll-your-own (RYO) cigarettes, using multivariate logistic regression models to identify the predictors of brand loyalty and reasons for brand choice. RESULTS 75% of FM-only smokers and 64% of FM+RYO smokers reported having a regular brand. Compared with FM-only smokers, FM+RYO smokers were, on average, older (28% vs 20% ≥40 years), low income (64% vs 43%) and had lower education (76% vs 44% < secondary). Mean price across FM brands was ZMW0.50 (US$0.08) per stick. Smokers were significantly less likely to be brand loyal (>1 year) if they were aged 15-17 years (vs 40-54 years) and if they had moderate (vs low) income. Brand choice was predicted mostly by friends, taste and brand popularity. Price was more likely to be a reason for brand loyalty among FM+RYO smokers, among ≥55-year-old smokers and among those who reported being more addicted to cigarettes. CONCLUSIONS These results in Zambia document the high levels of brand loyalty in a market where price variation is fairly small across cigarette brands. Future research is needed on longitudinal trends to evaluate the effect of tobacco control policies in Zambia.
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Affiliation(s)
- Ramzi G Salloum
- Arnold School of Public Health, University of South Carolina, Columbia, South Carolina, USA
| | - Fastone Goma
- University of Zambia School of Medicine, Lusaka, Zambia
| | - Grieve Chelwa
- School of Economics, University of Cape Town, Cape Town, Republic of South Africa
| | - Xi Cheng
- Arnold School of Public Health, University of South Carolina, Columbia, South Carolina, USA
| | - Richard Zulu
- Institute of Economic and Social Research, University of Zambia, Lusaka, Zambia
| | - Susan C Kaai
- Department of Psychology, University of Waterloo, Waterloo, Ontario, Canada
| | - Anne C K Quah
- Department of Psychology, University of Waterloo, Waterloo, Ontario, Canada
| | - James F Thrasher
- Arnold School of Public Health, University of South Carolina, Columbia, South Carolina, USA
| | - Geoffrey T Fong
- Department of Psychology, University of Waterloo, Waterloo, Ontario, Canada Ontario Institute for Cancer Research, Toronto, Ontario, Canada School of Public Health and Health Systems, University of Waterloo, Ontario, Canada
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