RESULTS FROM GLOBAL ADULT TOBACCO SURVEY (GATS) 2011

ECONOMICS OF TOBACCO USE

Nabilla Al-Sadat1, Chan YY2, Tee GH2, Fadhli Muhammad Yusoff2, Mohd Azahadi

Omar2, GS Sukhvinder3, Zarihah Zain3

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ASSOC PROF DR NABILLA AL-SADAT

MBBS (UM), MSc. HPF(London) MPH (UM) PhD (Aust) Centre for Population Health

Department of Social and Preventive Medicine, University of Malaya

Presentation Outline:

The economics of tobacco

use/ smoking and the

public health implications

The study Objectives

Methodology

Results

Policy options and

recommendations

Leverages to mitigate

implications

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What is economics?

Economics is the study of how

individuals and societies choose

to use the scarce resources that

have been provided

The key word is choose..

When we talk about choice, we are

talking about behavioral

economics..

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WHY look at economics ?

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What do we look at when we say “economics of

tobacco use”?

Price of cigarettes

consumption

prevalence taxation

income

SOCIAL COSTS

Taxes in Malaysia

The Ministry of Finance reports that revenue from excise duties on imported and locally manufactured goods, increased 17.6% from 2009 (RM 10.1 billion) to 2011 (RM 11.8 billion), mainly because of strong demand for goods such as cigarettes and liquor.

1. Economic Report 2010/2011 Ministry of Finance Malaysia

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Price and income elasticity

The price elasticity of cigarette demand is -0.38 which

means the demand of cigarettes decline by 3.8% with a

10% increase in taxes.

However, the same study estimated that the income

elasticity of cigarette demand in Malaysia is +1.0 which

means that 10% increase in income in Malaysia will lead

to 10% increase in cigarette demand.

Therefore, it can be expected that the tobacco epidemic in

Malaysia will spread with the income growth if no stringent

tobacco control measures are taken. 1. Ross, H. and Al Sadat, N. (2007). Demand Analysis of Tobacco Consumption,. Nicotine and

Tobacco Research Journal. 2007 Nov 9(11):1163-9 17978990

2. Al-Sadat, N., et al. (2007). Tobacco Use in Southeast Asia: Key evidences for Policy Development.

SEATCA Regional Summary Evidence paper: tax section: published June 2007

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Increase in taxes lead to reduce in consumption

Behavior is affected by affordability

Population most affected is the young and the poor

Quit rates are highest during changes in price structure

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Evidence based findings on economics of

tobacco use

A global epidemic (Figures are for the 20th century)

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PUBLIC HEALTH IMPLICATION

? Is our cigarettes affordable?

? Or is it made affordable?

Taxation alone wont work

We need progressive taxation

Tobacco kills and tobacco hurts the pockets too!!!

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Objectives – economics section in GATS

General objective:

The objective of the study is to determine the economic aspects

of tobacco use by current smokers of manufactured cigarettes

(not including kreteks).

Specific objectives: to determine the:

1. Brand of Manufactured Cigarettes at Last Purchase

2. Source of Last Purchase of Cigarettes

3. Average expenditures on Cigarettes by different population

groups

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METHODS A cross-sectional nationwide study among adults aged 15 years from

5112 households. Respondents were selected by using multistage

stratified cluster sampling.

Questions asked:

F01. The last time you bought cigarettes for yourself, how

many cigarettes did you buy?

F02. In total, how much money did you pay for this purchase?

F03. What brand did you buy the last time you purchased

cigarettes for yourself?

F04. The last time you purchased cigarettes for yourself,

where did you buy them?

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RESULTS AND

DISCUSSION

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Percentage of current manufactured

cigarette smokers by last brand purchased

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42%

11% 5%

4%

3%

35%

Dunhill Winston Marlboro Mild Seven Salem Others

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80%

6%

6%

1%

1%

3% 3%

Grocery store Convenience store or Kiosk Petrol station News stand Supermarket Roadside shop Other

Percentage of Source of Last

Purchase of Cigarettes

Average cost and monthly expenditure of manufactured cigarettes, and

percentage who did not have enough money for food because of

purchasing cigarettes, among manufactured cigarette smokers ≥15 years

old by selected demographic characteristics – GATS Malaysia, 2011.

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Demographic

Characteristics

Amount spent on

20 manufactured

cigarettes1

(Malaysian

Ringgit)

Manufactured

cigarette

expenditure per

month1

(Malaysian

Ringgit)

Not enough

money for food

because of

purchasing

cigarettes1,2

overall 10.1

(8.0, 12.2)

178.8 (140.4,217.1)

6.8

(4.6, 10.0)

Manufactured cigarette expenditure

per month by age groups

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15-2425-44

45-6465+

130.5

192.5 202.3

100.3

Manufactured cigarette expenditure

per month by locality

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0

50

100

150

200

250

Urban Rural

$

Manufactured cigarette expenditure

per month by level of education

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0

50

100

150

200

250

Less than primary Primary Secondary/Highschool

College or above

Manufactured cigarette expenditure

per month by ethnicity

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0

50

100

150

200

250

Malay Chinese Indian Other

Affordability 6.8% of current manufactured cigarette smokers reported that spending

money on cigarettes resulted in not having enough money for food sometime

in the last 6 months. Among the various subgroups, the only noticeable

difference was found among the age groups where the proportion of 15-24

year olds (13.1%) was higher than the other age groups.

Another economic indicator calculated - was the cost of 100 packs of

manufactured cigarettes as a percentage of per capita Gross Domestic

Product (GDP) 2011. This indicator provides a relative sense of how

affordable cigarettes are in the country. Calculating the average cost of 100

packs of manufactured cigarettes and factoring in the per capita Gross

Domestic Product (GDP) as of September 2011 (28,866 ringgits) suggested

that 3.5% of the GDP was spent on the purchase of manufactured

cigarettes in 2011.

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Discussion and Conclusion

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These results show that different groups of population spent different amounts on tobacco use. On average, a current manufactured cigarette smoker spent 178.90 ringgits per month on manufactured cigarettes but it varies among the groups. Among the various subgroups, the most noticeable difference was found among the age groups where the proportion of 15-24 year olds (13.1%) feeling the pinch on their pockets was higher than the other age groups. This is a strong evidence that the way to prevent uptake of cigarettes by the younger population is by increasing the prices of the cigarettes ( through progressive taxation) to make it unaffordable to this group of population.

Limitations

More in depth analysis needed

Profiling of those who are affected greatly by changes

in price

Income or proxy of income to be developed

What would be the optimum excise tax to prevent or

defer new uptakes

Linking with other research areas within NHMS like

alcohol and other addictive disorders

Raw data is needed

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KEY FINDINGS

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The average amount spent on a pack of 20 manufactured cigarettes was RM 10.10 (RM -Malaysian ringgits, currency for

Malaysia.) (USD 1 = RM 3.20 in 2012)

On average, a current cigarette smoker spent RM 178.90 per month on manufactured cigarettes.

Almost 7% of current manufactured cigarette smokers reported that spending money on cigarettes resulted in not having enough money for food sometime in the last 6 months.

Comparison of GATS country reports country prevalence males females Expendi

ture

In USD % of GDP

Thailand 23.7 45.6 3.1 575.5

Baht

18.27 3.4

Philippines 28.3 47.7 9.0 326.4

pesos

7.67 1.2

Vietnam 23.8 47.4 1.4 135000

VOD

7.00 2.7

Poland 27.0 33.5 21.0 208.52

zloyts

60.28 2.6

Russia 39.1 60.7 21.7 567.6

rubles

17.23 0.9

MALAYSIA 24.0 44.9 1.7 178.80

MYR

55.80 3.5

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The economic cost Smoking costs Malaysia a staggering RM30b a year – conservative estimate

of real social cost, mostly to health system and business. This dwarfs the $11.8 b contributed by tobacco and alcohol excise.

And who pays?

Business and Governments – in health care costs; in lost productivity – early retirement, sickness absence etc

Smokers – half of all long-term smokers will eventually die from tobacco – losing an average of 10 years life; half of these will die during productive middle age, losing 20-25 years of life

Non-smokers including: - Babies born to smoking mothers have lower birth weights and increased risk of SIDS and respiratory diseases - Workers and patrons - substantial costs incurred where people are exposed to tobacco smoke in workplaces and public places

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Plan of action – the economic way

If we are serious about curbing costs:

Raise tobacco prices – especially by increasing taxes

Make it unaffordable

defer new uptakes

Motivate quitters

Research and further research

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Take Home message

TOBACCO KILLS AND HURTS OUR POCKETS TOO

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GATS Malaysia Team

MOH

CDC and WHO

Organizing committee NIH conference

All for listening

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Acknowledgement

Terima Kaseh “This is not the end.

It is not even the beginning of the end.

But it is, perhaps, the end of the beginning”

(Winston Churchill)

nabilla@um.edu.my

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