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![Page 1: 1 The Role of Economic Research in Accelerating Tobacco Control Teh-wei Hu Professor Emeritus of Health Economics University of California, Berkeley To.](https://reader035.fdocuments.in/reader035/viewer/2022072011/56649e205503460f94b0b606/html5/thumbnails/1.jpg)
1
The Role of Economic Research in Accelerating Tobacco Control
Teh-wei HuProfessor Emeritus of Health Economics
University of California, Berkeley
To be presented at Tobacco Control Research in China Symposium October 19-21, 2011
Lijiang, Yunnan, China
![Page 2: 1 The Role of Economic Research in Accelerating Tobacco Control Teh-wei Hu Professor Emeritus of Health Economics University of California, Berkeley To.](https://reader035.fdocuments.in/reader035/viewer/2022072011/56649e205503460f94b0b606/html5/thumbnails/2.jpg)
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Overview
• Goal of the WHO Framework Convention on tobacco control
• How can economic research be used for tobacco control
• Future topics of economic research can accelerate tobacco control
• The way forward
![Page 3: 1 The Role of Economic Research in Accelerating Tobacco Control Teh-wei Hu Professor Emeritus of Health Economics University of California, Berkeley To.](https://reader035.fdocuments.in/reader035/viewer/2022072011/56649e205503460f94b0b606/html5/thumbnails/3.jpg)
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Goals of the WHO Framework Convention on Tobacco Control
-Interpreted in Economics-
• To reduce the demand and supply of tobacco products through government intervention
![Page 4: 1 The Role of Economic Research in Accelerating Tobacco Control Teh-wei Hu Professor Emeritus of Health Economics University of California, Berkeley To.](https://reader035.fdocuments.in/reader035/viewer/2022072011/56649e205503460f94b0b606/html5/thumbnails/4.jpg)
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How Can Economic Research be Used for Tobacco Control?
• To justify government intervention on tobacco control
• To reduce the demand for cigarettes
• To reduce the supply of tobacco products
![Page 5: 1 The Role of Economic Research in Accelerating Tobacco Control Teh-wei Hu Professor Emeritus of Health Economics University of California, Berkeley To.](https://reader035.fdocuments.in/reader035/viewer/2022072011/56649e205503460f94b0b606/html5/thumbnails/5.jpg)
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To Justify Government Intervention
• Economic cost of smoking
• Effective tobacco tax schemes
• Earmark part of tax revenue for tobacco control/health promotion
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Economic Cost of Smoking (in 2008 price)
Cost Estimate % of 2000
2000: RMB 50 billion (US$7.2 billion)
2003: RMB 119 billion (US$17.1 billion) 137%
2008: RMB 200 billion (US$ 28.9 billion) 300%
Yang, Sung, Mao, Hu (2011)
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Effective Tobacco Tax Scheme
• Specific excise tax is the most effective measure for tobacco control (avoid tax evasion and avoidance)
• China has only 0.06 RMB per pack• 2009 tax adjustment only changed ad
valorem tax rate at producer/wholesale price level
WHO (2010), Hi, Mao, Shi (2010)
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Earmark Part of Tax Revenue for Tobacco Control on Health Care
• More benefit than cost for tobacco control and improve equity for low income smokers
• Recent examples in Thailand, US, Australia, New Zealand, and HK (SAR)
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To Reduce the Demand for Cigarettes
• Through price (and tax) and quantitative relationships to predict cigarette consumption (and quantity)
• Predict government revenue changes
Mao, Hu, Sung (2008)
![Page 10: 1 The Role of Economic Research in Accelerating Tobacco Control Teh-wei Hu Professor Emeritus of Health Economics University of California, Berkeley To.](https://reader035.fdocuments.in/reader035/viewer/2022072011/56649e205503460f94b0b606/html5/thumbnails/10.jpg)
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Through Price (and tax) and Quantitative Relationships to
Predict Cigarette Consumption Change
• Price elasticity of the demand for cigarettes between -0.15 to -0.50 (one third responded to quitting and two thirds responded to the amount of reduction)
Mao, Hu, Sung (2008)
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Predict Government Revenue Change
• Increase RMB 1 per pack, government would increase
86 billion RMB (price elasticity at 0.15)
65 billion RMB (price elasticity at 0.50)
Hu, Mao, Shi, Chen (2008)
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To Reduce the Supply of Tobacco
• Help farmers to understand the costs and economic returns of alternative crops versus tobacco leaf
Revenue cost ratio:Tobacco 0.99Mulberry 4.00Fruit 2.00
Vegetable Oil1.70
Hu, Mao, Jiang, et al (2007)
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Future Topics of Economic Research that could Accelerate
Tobacco Control
• Study tobacco control on regional impact
• Study the impact of separating the China National Tobacco Company from the government ownership
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The Way Forward
• Translate economic research findings to top government policy makers
• Communicate findings to media professions
• If national tobacco tax reform is not possible, pilot tax experiments might be considered