Economics of Tobacco Use and Help-Seeking Behavior

Bishwa Adhikari, Ph.D., EconomistOffice on Smoking and Health

Centers for Disease Control and PreventionAtlanta, GA

North America Quitline ConsortiumPhoenix, AZJune 9, 2009

Health and Economic Burden of Smoking:

Smoking is the leading preventable cause of mortality and morbidity Approximately 43 million Americans are current smokers and

number of former smokers is higher than the current smokers National prevalence of smoking was about 42% in 1965 and in 2007

decreased to around 20% Smoking has been established as a risk factor for various forms of

cancers, cardiovascular and respiratory diseases More than 443,000 deaths, $167 billion in medical costs and

productivity losses annually are attributed to smoking Annual smoking-attributable mortality rates have declined in most

states

Cigarette Smoking by Socio-demographic Characteristics

In 2007, 19.8% of adults smoked cigarettes in the USA Estimates by age: 18–24 years (22.2%), 25–44 years (22.8%), 45–64

years (21.0%), and 65 years or older (8.3%) smoke Higher prevalence of smoking among men (22.3%) than women (17.4%) Estimates among race/ethnicity: American Indians/Alaska Natives

(36.4%), African Americans (19.8%), Whites (21.4%), Hispanics (13.3%), and Asians (9.6%)

Cigarette smoking prevalence is highest among adults with GED diploma (44.0%) and lowest among adults with a graduate college degree (6.2%)

Smoking is more common among adults below the poverty level (28.8%) than among those at or above the poverty level (20.3%)

Social determinants of health (e.g. poverty, education, employment) influence smoking

2025

3035

4045

Per

cent

1960 1970 1980 1990 2000 2010Year

White Black

Smoking Prevelance Among US Adults by Race (1965-2007)

2030

4050

Per

cent

1960 1970 1980 1990 2000 2010Year

Male Female

Smoking Prevelance Among US Adults by Gender (1965-'07)

020

040

060

0B

illio

n

1900 1920 1940 1960 1980 2000Year

Number of Cigarette Sales (1900-'06)

01,

000

2,00

03,

000

4,00

0C

igar

ette

s

1900 1920 1940 1960 1980 2000Year

Per Capita Cigarettes Sales (1900-'06)

01

23

4$

1970 1980 1990 2000 2010year

Cost Real Cost

Cost Per Pack of Cigarette(1970-'08)

0.5

11.

5$

1970 1980 1990 2000 2010Year

Total tax State tax

Real total tax Real state tax

Cigarette Taxes Per Pack (1970-2008)

5,00

010

,000

15,0

0020

,000

25,0

00$/

Yea

r

1970 1980 1990 2000 2010Year

Income Real Income

Per Capita Income in US (1970-2008)

Source:http://apps.nccd.cdc.gov/statesystem/

Source:http://apps.nccd.cdc.gov/statesystem

Consumer Behaviors: Tobacco use is an addictive behavior Demand for cigarette responds to changes in prices (direct and indirect)

– Retail price– Smoking restrictions in public places and fines– Time and discomfort – Health consequences

Demand for cigarette is inversely related to retail price of cigarettes– 10% increase in price results in 4% decrease in demand– Fed. Tax increase in April, 2009 will decrease cigarette demand

Higher cigarette prices lead to increased demand for other tobacco products (substitution effect)

Age group Total elasticity

Prevalence elasticity

Cig. per day per smoker

12-17 -1.40 -1.20 -0.25

18-25 -0.89 -0.74 -0.20

26-35 -0.47 -0.44 -0.04

36-74 -0.45 -0.15 -0.15

All adults 20-74 -0.42 -0.26 -0.10

Price Elasticity of Cigarette Demand

Source: K.E Warner, Smoking and health implications of a change in the federal cigarette excise Tax, JAMA. 1986;255:1028-1032

Consumer behaviors …

Demand for cigarette is also inversely related to income

Price sensitivity is inversely related to age (youth are more sensitive to price)

Cigarette demand is less sensitive among educated or richer

Demand is also affected by

– advertisement and promotional activities by tobacco industry

– anti-tobacco campaigns by governments and other organizations

Quitlines in the USA

According to North American Quitline Consortium (2009):

– 328,795 smokers called quitlines to seek help in 2006

– Less than 1% of the country’s total smokers

– Additional resources (e.g. funding) would help increase the number of tobacco users receive quitline services

• per capita funding for quitlines in fiscal year 2006 was 22 cents and per smoker funding was $1.10

• CDC recommends $3.49 per capita funding for cessation services

– Quitlines have capacity to reach 16% of the smokers annually

Utilized capacity would increase the number of smokers receiving quitline services to approximately 7 million per year

• increase quit attempts, reduce relapse rates and • Increase number of quitters per year

Recent Economic Crisis and Tobacco USE

Current economy will prompt smokers to change their smoking habits

– cut back on cigarettes or attempt to quit smoking

– seek smoking cessation services Unemployment may play a significant role in establishing

smoking habit

– odds of smoking among unemployed is higher (British study) Recent federal tax increase of $0.65 per pack will reduce

smoking prevalence and increase demand for cessation services

– decrease demand for cigarettes by 6%

– decrease smoking prevalence among youths by 18%

– approximately 1.7 million total quitters

Recent Economic Crisis …

Continued economic recession will drive more people to Quitlines– Due to the income responsiveness of cigarette demands

If economic stimulus funds become available to states, they will be able to increase the quitlines coverage and promotions

– Economic stimulus bill allocated $75 million for tobacco cessation services

– Increase in availability of medications and self help materials through quitlines will increase the volume of callers

Utilize low-cost promotional strategies to counter economic crisis Develop strong linkages with healthcare providers

– Clinical interventions motivate patients to quit smoking or encourage them to call quitlines

Conclusion

Smoking prevalence has declined in last few decades Declines in prevalence occurred as a result of 1964 Surgeon General’s report on

smoking, which increased awareness about the health consequences of smoking Declines in prevalence also because of the ongoing documentations of the economic

consequences of smoking Excise tax increase and tobacco control policies have also contributed to the decline Current economic situation is an opportunity to:

– prompt smokers try to quit smoking– reduce overall smoking prevalence– lower smoking initiations among youths and young adults– reduce the health and economic burden of smoking

Current economic climate is an opportunity to:– increase awareness of Quitlines and services provided– increase level of quitlines funding to expand cessation services– target populations that are disproportionately affected by smoking

Contact information:

Bishwa Adhikari, Economist

Email: bia6@cdc.gov

Phone: 770-488-5718

Web: http://www.cdc.gov/tobacco