Tobacco Control in Developing Countries and
Curbing the Epidemic
P Jha, FJ Chaloupka on behalf of the
report team
The World Bank
WHO
Why this book?
Economic arguments around tobacco control are unclear
and often debated


In 1996, an Asian Health Minister stated “cigarette
producers are making large contributions to our economy...
we have to think about workers and tobacco farmers”
In 1997, The Economist commented "most smokers (twothirds or more) do not die of smoking-related disease. They
gamble and win. Moreover, the years lost to smoking come
from the end of life, when people are most likely to die of
something else anyway”
Source: Tobacco Control 1996, The Economist 1997
Methodology

Consultation workshops: Washington D.C.
1996, Beijing 1997, Cape Town 1998
 Cape

Town Proceedings published in 1998
19 Background papers
 40
economists, epidemiologists, and control experts
from 13 countries.
 Reviews of literature
 New analyses
 2 rounds of peer review

Synthesized in “Curbing the Epidemic”,
Jha and Chaloupka, 1999
Outline of book
 Tobacco use
and its consequences
 Analytics of tobacco use
 Demand for tobacco
 Supply of tobacco
 Policy directions
Most smokers live in developing countries
Current smokers in 1995 (in millions)
Region
Number
Low/Middle income
933
High Income
209
World
1,142
Quit rates low in low income countries
 5-10% in China and India
15-21% in Hungary and Poland
 30-40% in UK
Source: Jha et al, 2002, AJPH
Large and growing number of deaths
from smoking
Past and future tobacco deaths (in billions)
Time
1901-2000
Billions of deaths
0.1 (mostly in developed
countries)
2001-2100
 0.5
1.0
(mostly in developing
countries)
B among people alive today
1 in 2 of long-term smokers killed by their addiction
1/2 of deaths in middle age (35-69)
Source: Peto and Lopez, 2001
Trends in smoking in Norwegian males
by Income Group
Male smoking prevalence
85%
75%
High income
65%
55%
45%
Low income
35%
25%
1955
1960
1965
Source: Lund et al., 1995
1970
1975
Year
1980
1985
1990
Smoking is more common among the less educated
Smoking prevalence among men in
Chennai, India, by education levels
64%
58%
Smoking prevalence
60%
42%
40%
21%
20%
0%
Illiterate
<6 years
6-12
years
Length of schooling
Source: Gajalakshmi and Peto 1997
>12
years
Nicotine addition and the poor:
Plasma cotinine ( ng/ ml)
Plasma cotinine in adult smokers by socioeconomic status
35
0
30
0
25
0
20
0
0
1
2
3
4
Socio-economic status
Source: Health Survey, England, 1999; Bobak et al, 2000
Smoking accounts for much of the mortality gap
between rich and poor
Risk of death of a 35 year old male before age 70,
by education levels in Poland, 1996
60%
50%
Other causes
40%
28%
30%
22%
20%
5%
21%
10%
1%
1%
5%
9%
Higher
Secondary
19%
0%
Source: Bobak et al., 2000
Primary
Attributed to SMOKING
but would have died
anyway at ages 35-69
Attributed to SMOKING
Why should governments intervene?
Economic rationale or “market failures”
Smokers do not know their risks
 Addiction and youth onset of smoking

 Lack
of information and unwillingness to
act on information
 Regret habit later, but many addicted

Costs imposed on others
 Costs
of environmental tobacco smoke
and health costs
Source: Jha et al., 2000
Underestimated risks of smoking
7
in 10 of Chinese smokers thought smoking does
them “little or no harm”
 Risks not internalized: personal risks perceived
lower than average risks
 Risks of addiction downplayed: only 2 in 5 of US
adolescents intending to quit actually do

in high-income countries, 7 in 10 smokers wish they
had not started
Source: Kenkel and Chen, 2000; Weinstein, 1998; SGR, 1989 and 1994
Tobacco addiction starts early in life
US
(bot h sexes,
Cumulative uptake in percent
100
born 1952-61)
C hi na
(males,1996)
US
80
(bot h sexes,
born 1910-14)
I ndi a
(males, 1995)
60
40
20
0
15
20
25
Age

Every day 80,000 to 100,000 youths
become regular smokers
Source: Chinese Academy of Preventive Medicine 1997, Gupta 1996, US Surgeon
General Reports, 1989
Healthcare costs from smoking

Annual (gross) healthcare costs:
 0.1-1.1%
of GDP, or 6 -15% of total health costs in highincome countries
 proportionally similar in lower-income countries

Net (lifetime) healthcare costs:
 Differences
in lifetime costs are smaller than annual
costs
 Best studies do suggest there are net lifetime costs
 Pension or “smokers pay their way” arguments are
complex
Source: Lightwood et al., 2000
Government roles in intervening
To deter children from smoking
 To protect non-smokers from others’ smoke
 To provide adults with necessary information to
make an informed choice

 First-best instrument, such
as youth restrictions, are
usually ineffective. Thus, tax increases are justified,
and are effective.
 Tax increases are blunt instruments.
Source: Jha et al., 2000
Tobacco deaths (million)
Unless current smokers quit, smoking deaths
will rise dramatically over the next 50 years
520
500
500
Baseline
400
340
300
220
200
100
0 0
1950
190
70
2000
2025
Year
Source: Peto and Lopez, 2001
2050
If proportion of
young adults
taking up smoking
halves by 2020
If adult
consumption
halves by 2020
Which interventions are effective?
Measures to reduce demand
Higher cigarette taxes
 Non-price measures: consumer
information, research, cigarette advertising
and promotion bans, warning labels and
restrictions on public smoking
 Increased access to nicotine replacement
(NRT) and other cessation therapies

Taxation is the most effective measure
Higher taxes induce quitting, reduce consumption
and prevent starting
 A 10% price increase reduces demand by:

 4%
in high-income countries
 8% in low or middle-income countries
 About half of the effect is on amount and half on
initiation
 Long-run effects may be greater

Young people and the poor are the most price
responsive
Source: Chaloupka et al., 2000
Cigarette price and consumption show
opposite trends (1)
Real price of cigarettes and annual per adult cigarette consumption in
South Africa 1970-1989
1.3
Consumption
per adult
1.2
0.08
1.1
0.07
1
0.9
0.06
Real price
0.8
0.05
0.7
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988
Year
Source: Saloojee 1995
Real Price
Cigarette consumption per adult (in packs)
0.09
Cigarette price and consumption show
opposite trends (2)
Real price and consumption of cigarettes in the UK
1971-1996
Real price of cigarettes and cigarette consumption in the UK, 1971-96
17000
£ 2.65
CONSUMPTION
16000
Cigarette Consumption
1994 prices (£m)
14000
£ 2.25
13000
£ 2.05
12000
£ 1.85
11000
£ 1.65
PRICE
10000
£ 1.45
9000
1971
£ 1.25
1974
1977
1980
1983
Year
Source: Townsend 1998
1986
1989
1992
1995
Price (£) 1994 value
£ 2.45
15000
There is still ample room, especially in lowerincome countries, to raise cigarette taxes
Average price in US$
Average tax in US$
Tax as a percentage of price
3.00
80
70
60
2.50
50
2.00
40
1.50
30
1.00
20
0.50
10
0.00
0
High Income
Upper Middle
Income
Lower Middle
Income
Countries by income
Source: Chaloupka et al., 2000
Low Income
Tax as a percentage of price
Average price or tax per pack (US$)
3.50
Cigarette tax increases result in
higher tax revenues (1)
Real cigarette tax rate and real cigarette tax revenue in
the US 1960-95
Cigarette tax rate and cigarette tax revenue in the US 1960-1995
80
70
0.5
60
0.4
50
0.3
40
30
0.2
real cigarette tax rate
real cigarette tax revenue
20
0.1
10
0
19
60
19
62
19
64
19
66
19
68
19
70
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
0
Year
Source: Sunley et al., 2000
Real cigarette tax revenue in millions of US$
Real cigarette tax rate per pack (aveage for all states)
0.6
Non-price measures to reduce demand
Increase consumer information:
dissemination of research findings, warning
labels, counter-advertising
 Comprehensive ban on advertising and
promotion
 Restrictions on smoking in public and work
places
 Increase access to nicotine-replacement
therapies (NRT)

Health information reduces the
demand for cigarettes
Country
Time Event
The US
1964
Surgeon General
Report
UK
1962
1st report of the Royal
College of Physicians
5%
Switzerland 1966
An anti-smoking
campaign
11%
Turkey
Implementation of
health warning labels
8%
1982
Source: Kenkel and Chen, 2000
Immediate reduction in
cigarette consumption
1-2%
Comprehensive advertising bans reduce cigarette consumption
Cigarette consumption per capita
Consumption trends in countries with such bans vs. those with no bans
(n=102 countries)
1750
1700
Ban
1650
1600
No Ban
1550
1500
1450
1981
1991
Year
Source: Saffer, 2000
Effect of advertising bans and
counter-advertising
A comprehensive set of tobacco
advertising bans can reduce consumption
by 6.3%
 Counter-advertising messages (set at 15%
of the total number of advertising
messages) can reduce smoking by about
2% a year

Source: Saffer, 2000
Clean indoor-air laws and
youth access restrictions
Clean indoor-air laws:
 can reduce cigarette consumption
 can be self-enforcing
 work best with social consensus against
smoking
 Youth access restrictions:
 mixed evidence of effectiveness
 require aggressive reinforcement

Effectiveness of cessation

Intervention
Brief advice to stop
by clinician
Increase in 6 month
quit rates (%)
2 to 3

Adding NRT to brief advice
6

Intensive support plus NRT
8
Source: Raw et al., 1999; AHCPR, 1999
NRT and cessation therapies



Adherence rates still low (<40%), and time
dependent
Role of anti depressants, intensive efforts,
combination agents still not clear
Price and access issues remain barriers
Source: Novotny et al., 2000
NRT and cessation therapies





NRTs double the effectiveness of cessation
efforts and reduce individuals’ withdrawal costs
Governments may widen access to NRT and
other cessation therapies by:
Reducing regulation (like cigarette markets
today)
Conducting more studies on cost-effectiveness
(especially in low/middle income countries)
Considering NRT subsidies for poorest smokers
Source: Novotny et al., 2000
Impact of interventions on initiation
and cessation
Intervention
Price increases
Anti-smoking
media
Advertising and
promotion bans
Initiation
10% increase=3-10%
decrease
Weak evidence
Reduces experimenting
and initiation, higher
effects on female
Cessation
10% increase=11-13% shorter
duration, 3% higher cessation
Increased number of attempts
and success
Complete ban reduces
consumption by about 6%
Youth access
Weak evidence
No evidence
Smoking
restrictions
Some evidence of lower
initiation
Work and household
restrictions most effective
NRT
No evidence
More decisions to quit and
higher number of attempts
Source: Ross et al, 2001
Potential reductions in deaths (millions)
from a price and non-price measures
Income group
Price
increases of
10%
Non-price
measures
with
effectiveness
of 2 to 10%
NRT (publicly
provided) with
effectiveness
of 0.5 to 2.5%
Low / middle
4 to 14
4 to 21
1 to 5
High
0.5 to 2
1 to 5
0.2 to 1
World
5 to 16
5 to 26
1 to 6
Source: Ranson et al., 2002
Documenting changes in response to
control policies
 CALIFORNIA:
 14%
versus rest of the US
vs. 3% decline in lung cancer rates
 MONICA analyses
of 36 countries:
control has been partially effective
 male never smokers rose

female ex-smokers rose, but new smokers
rose
Source: CDC, 2000; Molirus et al., 2000
Cumulative deaths avoided (millions)
before age 60 with interventions in low and middle-income
countries, 1998-2020
Infectious and
maternal
conditions ($26-46
billion/year)
124
83
42
13
4
2005
11
20
32
2010
2015
2020
Year
Source: CMH, 2001
Adult smoking
cessation (selffinancing)
Which interventions are ineffective at
reducing consumption?
Most measures to reduce supply
Prohibition
 Youth access restrictions
 Crop substitution
 Trade restrictions
 Control of smuggling is the only exception
and it is the key supply-side measure

Source: Jacobs et al., 2000; Woolery et al., 2000; Taylor et al., 2000
What are the costs of tobacco control?

Revenue loss: likely to have revenue gains
a
10% tax increase would raise revenue by 7%
Job loss: temporary, minimal, and gradual
 Possible smuggling: crack down on criminal

activity, not lower taxes

Cost to individuals, especially the poor:
partially offset by lower consumption
Studies on the employment effects of dramatically
reduced or eliminated tobacco consumption
Type of country
Name and year
Net Exporters
US (1993)
0%
UK (1990)
+0.5%
Zimbabwe (1980)
-12.4%
South Africa (1995)
+0.4%
Scotland (1989)
+0.3%
Bangladesh (1994)
+18.7%
Balanced Tobacco
Economies
Net Importers
Net change as % of
economy in base
year given
Source:Buck et al, 1995; Irvine and Sims, 1997; McNicoll and Boyle 1992,
Jacobs et al, 2000; Warner et al , 1996
Smuggling of cigarettes

Industry has economic incentive to smuggle
 Increase


market share and decrease tax rates
Best estimate: 6 to 8.5% of total consumption
Non-price variables important
 Perceived
level of corruption more important than cigarette
prices

Tax increase will lead to revenue increase, even in the
event of increased smuggling
Source: Merrriman et al. 2000; Joosens, 2000; BAT,1998
Estimated smuggling in 1995 in selected
European countries
Country
Price per
pack in US$
1995
Estimate of
smuggling as a
percentage of
1995 domestic
sales by expert
sources
Austria
2.96
15%
Spain
1.38
15%
Germany
3.38
10%
Italy
2.19
12%
Greece
1.90
8%
Sweden
4.58
2%
UK
4.16
2%
Source: Merriman et al., 2000
Tobacco smuggling tends to rise in line with the
degree of corruption
Smuggling as a function of transparency index
Smuggling as a share of consumption (%)
0.40
Cambodia
0.35
0.30
Pakistan
0.25
y = - 0.02x + 0.2174
R2 = 0.2723
0.20
0.15
Brazil
Austria
0.10
0.05
Indonesia
Sw eden
0.00
0
2
4
6
Transparency index for country
Source: Merriman et al., 2000
8
10
Control of smuggling

Countries need not make a choice between higher
cigarette tax revenues and lower cigarette
consumption
 Higher

tax rates can achieve both
Effective control measures of smuggling exist
 Focus
on large container smuggling
 Prominent local language warnings and tax stamps
 Increase penalties
 Licensing and tracking of containers
 Increase export duties or bonds

Multilateral tax increases help combat smuggling
Source: Merrriman et al. 2000; Joosens, 2000; BAT, 1998
Lower tax rates in Canada in
response to smuggling
Real price of cigarettes and annual cigarette
Tax reduc ed in an
attempt to c ounter
smuggling
I
Real price per pack (USD)
7
90
80
V
6
70
5
60
4
50
3
40
30
2
20
1
10
Real Price
Consumption
Source: Jha and Chaloupka, 1999
1995
1994
1993
1992
1991
1990
0
1989
0
Annual cigarette consumption per
capita (in packs)
consumption per capita, Canada, 1989-1995
Smuggling and tax revenue (1)
SOUTH AFRICA, 1990s
 Increased excise tax from 38 to 50% of retail price
 Smuggling
rose from 0 to 6%
 Sales fell 20%
 Revenue went up 2 fold
CANADA, 1993-94
 Lowered tax in response to organized smuggling
 Retail
price fell by half
 Total consumption rose 30%, more so in young
 Average revenue per capita fell by 35%
Source: Abedian, 1998; Sweanor, 1998
Distribution of control policies scores
by income group
Income
group
ETS
Low
(n=51)
Middle
(n=52)
Upper
middle
(n=30)
3.9
3.2
2.0
1.3
9.1
6.0
3.7
1.3
2.6
13.7
6.3
3.7
1.7
3.2
15.3
Source: Chaloupka et al., 2001
A and P Product Tax Total score
Regulation
Summary

Tobacco deaths worldwide are large and growing, and
have higher burdens among the poor

Specific market failures support government intervention

Demand measures, chiefly tax increases, information, and
regulation are most effective to reduce consumption, and
are also cost-effective

Helping adults quit is as important as preventing kids from
starting

Control of smuggling is the major supply-side
intervention

Poor coverage of known effective interventions in lower
income countries
An agenda for cessation in Europe
Goal: raise ex-smoking rates to 50% by 2010 in Eastern and Central Europe
 European Tobacco Intervention Program (modelled after regional HIV/AIDS
programming in Africa and Latin America or ASSIST program by CDC);
 Major EU/World Bank support of 1 billion Euro/year for 7-10 years (1E/capita);
 WHO as accountable nodal agency (with separate governance board) with tasks
as: research networks on surveillance (inc. smoking on all death certificates), quit
campaigns, cessation advice standards and warning label research, policy work on
standardising EU entry, partnership with Big Pharma;
 Regional centres for local publicity and clinical research (MONICA or EPIC as
models or as a base), including regional training network on tobacco policy at 5-10
universities;
 NGOs selected for advocacy and uncovering industry practices;
 Negotiated future price guarantees for better cessation products; and
 Only major supply-side focus is on smuggling, including industry involvement and
impact on price (take little action on the tobacco subsidy);
Source: Jha, Ross, Chaloupka
www.tobaccoevidence.org
International Tobacco Evidence
Network (ITEN)
internet-based information sharing
 enhancing research capacity in 5 regional
technical centres;
 providing a peer review function and
dissemination vehicle for primary research
 fostering interdisciplinary research using peerreviewed research protocols on priority topics

www.tobaccoevidence.org