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Economics

Funds Needed

Per-capita annual cost of the four “best buy” tobacco control measures

0 - 0.09
0.1 - 0.0499
0.5 - 4
No Data

The four measures include: tobacco tax increases, smoke-free policies, package warnings, and advertising bans. The estimates include the human resources and physical capital needed to plan, develop, implement, monitor and enforce the policies.

Per-capita annual cost of the four “best buy” tobacco control measures

Cost Effectiveness: “With […] cost-effectiveness rivalled only by basic childhood immunisations, few public investments provide greater dividends” –World Health Organization, 1997

$68M in 2011 was the total international assistance for tobacco control efforts in all low- and middle-income countries. This was also the amount spent EVERY THREE DAYS by the tobacco industry to advertise and promote its products in the United States of America.

Economic Costs

Direct and Indirect Tobacco-Attributable Costs as a Percentage of Gross Domestic Product

COUNTRY
YEAR
TOTAL COSTS AS A PERCENTAGE OF GDP
DIRECT COSTS AS A PERCENTAGE OF GDP
INDIRECT COSTS AS A PERCENTAGE OF GDP

CHINA
2008
0.64%
0.14%
0.50%

KOREA
2008
0.33%
0.09%
0.24%

US
2009-2012 avg.
2.00%
0.92%
1.08%

SWEDEN
2007
0.35%
0.10%
0.25%

Direct costs are the costs of treating tobacco-related disease borne by the healthcare systems. The main component of indirect costs is lost workplace productivity.

Health Funding

Development assistance for health in low- and middle-income countries (LMICs) which includes funding from bilateral and multilateral donors, non-governmental organizations, private foundations, and the corporate sector; by focus area, in millions USD, 2011

Direct costs are the costs of treating tobacco-related disease borne by the healthcare systems. The main component of indirect costs is lost workplace productivity.

Cost-Benefit

Savings created by tobacco control interventions; in millions USD, 2013
 
MISSOURI, USA
TAIWAN, CHINA
UNITED KINGDOM
AUSTRALIA
GERMANY

 
Tobacco Prevention and Cessation Initiative: Smoke-free policy change
Outpatient Smoking Cessation Services program: Counseling and nicotine replacement therapy
Taxation: 5% increase in cigarette price
Australian National Tobacco Campaign: Intensive 6-month mass media
anti-smoking campaign
Smoke-free Class Competition: Reward non-smoking classes to
prevent students from becoming established smokers

NET SAVINGS
$62M
over remaining lifetime of 5761 quitters
$224M
over 15% years
$18,461M
over 50 years
$912M
over remaining lifetime of 190,000 quitters
$25M
over 1 year

EXAMPLES OF HOW THESE SAVINGS COULD BE SPENT
Annual budget for restoration and conservation of Missouri’s forests and wildlife.
Taiwan’s annual government budget for environmental protection.
Government annual spending on industry, agriculture and employment.
Australia’s annual governmental investment in early childhood education.
Government annual spending on helping ethnic Germans living in Eastern Europe.

“Today, many of the threats to health that contribute to noncommunicable diseases come from corporations that are big, rich and powerful, driven by commercial interests, and far less friendly to health. Forget collaboration with the tobacco industry. Never trust this industry on any count, in any deal. Implement the WHO Framework Convention on Tobacco Control. Doing so can avert around 5.5 million deaths each year at a cost, in a low-income setting, of less than 40 cents per person. There is no other “best buy” for the money on offer.”-Dr. Margaret Chan, Director-General of WHO, 2011

Discounts Dominate

Cigarette marketing expenditures by category, USA, 2011; USD, in millions

Largely due to the ban on direct and indirect ads and sponsorship in the USA, the tobacco industry spends most of its marketing dollars (85.6%) on price discounts and coupons.

Advertising and promotional expenditures for cigarettes increased from $8.0 billion in 2010 to $8.4 billion in 2011; however, the total number of cigarettes sold decreased by 8.1 billion units (2.9%).

Industry Propaganda

Illegal cigarettes: Who’s in control?, a video created and distributed by British American Tobacco, tries again to link government regulation of the tobacco market to illicit trade and organized crime.

“MY VIEWS AS TO HOW WE SHOULD PASS ON THE PRICE INCREASE in the event of an increase in the excise tax: … suggest that people stock up to avoid the price increase, and … when people … go to the store to buy more, they will be less likely to remember what they last paid.” -Myron E. Johnston, Philip Morris Researcher, 1987

1/2

Even in the United Kingdom, where almost 90% of the retail price of cigarettes is tax, half of recent price increases (6p of 12p) ARE DIRECTLY ATTRIBUTABLE TO INDUSTRY PRICING STRATEGIES, and not to the tax increases themselves.

Opportunity-cost of cigarettes

Slices of bread and servings of rice that could be bought for the price of an average pack of cigarettes; 2013

Purchasing the necessities in life is made more difficult with each extra pack of cigarettes purchased. This matters most for people in low socioeconomic status groups, who make the greatest financial trade-offs to continue smoking.

Resources

Methods

Figures on opportunity costs to purchase cigarettes from 89 countries are available in the Source Data file.

Sources

Economist Intelligence Unit. Worldwide Cost of Living Survey. The Economist; 2013. Proprietary Subscription-Based Data.

The Whole Grains Council. What Counts as a Serving?. 2013 [cited 2014 May 9].

Prices of different products

Average prices of equivalent amounts of different tobacco products; 20g or 20-stick Pack or 6.67 Cigarillos, in USD, 2013

Product prices vary within and among product categories. Tobacco control should always take care to raise prices across all products and places.

Resources

Methods

Figures on product prices in 2013 from 79 countries are available in the Source Data file.

Sources

Euromonitor International. Passport: Global Market Information Database. Euromonitor International; 2014 [cited 2014 Apr 23].

Price Gap

Price difference between a pack of the most popular and the cheapest brand of cigarettes; 2013

A large price spread provides smokers the opportunity to lessen the impact of a price increase by switching to a cheaper brand.

Resources

Methods

Figures on cigarette price gaps in 2013 from 79 countries are available in the Source Data file.

Sources

Euromonitor International. Passport: Global Market Information Database. Euromonitor International; 2014 [cited 2014 Apr 23].

“Sugar, rum, and tobacco, are commodities which are nowhere necessaries of life, [but] which are … objects of almost universal consumption,and which are therefore EXTREMELY PROPER SUBJECTS OF TAXATION.”–Adam Smith, 1778, United Kingdom

Many health insurance plans in the USA levy tobacco user surcharges on premiums as an economic disincentive to smoke. For a ‘pack-a-day’ smoker, an $80 monthly tobacco surcharge INCREASES THE COST OF SMOKING BY $2.25 PER DAY. In an early study, over 40% of tobacco users reported quitting tobacco to avoid the surcharge.

–Liber et al, Nicotine and Tobacco Research, 2014.

In 2013, U.S. business analyst Bonnie Herzog predicted that e-cigarette sales in the U.S. will reach $10 billion by 2017.

Price Changes

Average annual percent change in real price on the most popular price category of cigarettes; 2008–2012

4.1 - 75
1.1 - 4
-1 - 1
-4 - -1.1
-20 - -4.1
No Data
Resources

Methods

Price from WHO GTCR 2013; Inflation from World Bank, 2013. For HKG, Price from EIU Cost of Living Survey, 2013; 2014 For ARG, ERI, FSM, KIR, MHL, PLW, TKM, TUV, UZB, ZWE Inflation from IMF, 2014.

Sources

World Bank. World Development Indicators. World Bank; 2014 [cited 2014 Apr 17].
WHO. WHO report on the global tobacco epidemic 2013. WHO; 2013.
Economist Intelligence Unit. Worldwide Cost of Living Survey. The Economist; 2013. Proprietary Subscription-Based Data.
IMF. World Economic Outlook Database. International Monetary Fund; 2014 [cited 2014 Aug 18].

Average annual percent change in real price on the most popular price category of cigarettes; 2008–2012

“In 2004-2005, tobacco consumption [impoverished] roughly 15 million people in India.”

—Rijo M John et al, Tobacco Control, 2011

Tobacco impoverishes countries

Productivity loss and healthcare cost burdens undermine economic development in many countries.

TANZANIA

$40M OF $50M REVENUE
Tanzania earns $50 million per year from tobacco but spends $40 million for tobacco- related cancers alone.

UNITED STATES

$6000 EXCESS COST PER SMOKER
US smokers cost their employers an excess of $6000 a year per smoker due to lower on-the-job productivity, higher absences, and excess healthcare costs.

BRAZIL

100M REALS
The cost to Brazil due to tobacco is approximately 100 million reals per thousand smokers in lost productivity.

Vicious cycle

Disadvantage increases smoking likelihood, and smoking increases likelihood of disadvantaged circumstances

Financial strain

Percentage of smokers who spent money on cigarettes instead of household essentials

Smokers spend money on cigarettes instead of on household essentials such as food and education. This could exacerbate the poor’s disadvantaged circumstances and standard of living.

Income Up In Smoke

Percentage of median household income needed to buy 10 of the cheapest brand of cigarettes per day, 2012

10 - 100
7.5 - 9.99
5 - 7.49
2.5 - 4.99
0 - 2.49
No Data

This represents the drain on household income from a single person smoking a reasonable number of cigarettes per day. This spending will make being impoverished that much more difficult.

Percentage of median household income needed to buy 10 of the cheapest brand of cigarettes per day, 2012

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