Publication: Cigarette Smoking in Indonesia: Examination of a Myopic Model of Addictive Behaviour
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Published
2010
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1660-4601
Date
2012-03-30
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Using aggregated panel data taken from three waves of the Indonesian Family Life Survey (1993-2000), this article tests the myopic addiction behaviour of cigarette demand. Sensitivity analysis is done by examining a rational addiction behavior of cigarette demand. The results provide support for myopic addiction. The short- and long-run price elasticities of cigarette demand are estimated at -0.28 and -0.73 respectively. Excise taxes are more likely to act as an effective tobacco control in the long-run rather than a major source of government revenue.
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Publication Cigarette Consumption, Taxation, and Household Income : Indonesia Case Study(World Bank, Washington, DC, 2005-02)Cigarette consumption has been increasing in Indonesia, as in many other developing countries, causing a rising burden of disease and premature death. Higher excise taxes have proved effective in many countries in reducing cigarette consumption and raising government revenues. This study examines the effect of higher prices/taxes on the decision to smoke, the quantity of cigarettes consumed by smokers in different income groups in Indonesia, and government revenues. It uses 1999 Social and Economic Survey (SUSENAS) household data, with households as the unit of analysis. There was at least one smoker in 57 percent of all households. Most households smoked kretek cigarettes with filters (64 percent), or without filters (31 percent). Average household monthly cigarette consumption was 18 packs of 16 cigarettes. Per capita cigarette consumption was higher for higher income households: 7.83 packs per month, compared to 4 packs for low-income households. On average, households spent 6.22 percent of their total income on cigarettes and kreteks, lower-income households spent the highest percentage. The study suggests that price is not a significant factor in household decisions to smoke or not, but has a significant effect on the quantity of cigarettes smoked: each 10 percent increase in price would reduce total cigarette consumption by 6 percent. The reduction would be higher-nearly 7 percent-among low-income households, and lower-3 percent-among high-income households. Cigarette consumption increases as income rises: a 10 percent increase in household income would increase consumption by 6.5 percent, with a particularly strong effect among low-income households-a 9 percent increase-but little change among high income households-an increase of less than 1 percent. Simulations show that a 10 percent tax increase that raised cigarette prices by 4.9 percent would reduce consumption by 3 percent, and increase tax revenues by 6.7 percent, ceteris paribus, including assuming no significant switching among cigarette products with different prices and tax levels.Publication Aggregate Analysis of the Impact of Cigarette Tax Rate Increases on Tobacco Consumption and Government Revenue : The Case of Indonesia(World Bank, Washington, DC, 2005-01)This study uses aggregate times series data (annual data from 1970-2001) and monthly data from January 1996 to June 2001 to estimate the price and income elasticity of demand for tobacco products in Indonesia. Using various model specifications used in the cigarette demand literature, and then selecting the best model, it estimates the real price elasticity of cigarette demand as -0.345 and income elasticity of demand as 0.473. This inplies that a 10 percent real price increase would reduce consumption by 3.4 percent, and a 10 percent real income increase would raise consumption by 4.7 percent. The economic crisis after 1997 was found to increase consumption, over and above the effects of price and income, and the warning label on cigarette packs required after 1991 appears to have no significant impact on demand. Estimates based on the shorter period of monthly data showed less responsiveness to price and incomes, as would be expected. The study simulates the effects of a tax increase on total tobacco excise revenues and predicts that an increase in the tax level of 10, 50, or 100 percent would increase total tax revenue by 9 percent, 43 percent, and 82 percent respectively. The study comments on the effect of possible switching to cheaper products or illegal purchases.Publication Cigarette Affordability in Indonesia(World Bank, Washington, DC, 2018-05)This study analyzes the recent evolution of cigarette affordability in Indonesia and weighs implications for the country’s tobacco control policyPublication Modeling the Long-Term Health and Cost Impacts of Reducing Smoking Prevalence through Tobacco Taxation in Ukraine(World Bank, Washington, DC, 2017-03-12)Smoking is a leading cause of preventable premature deaths. Smoking’s effects will continue to devastate lives in many countries, including Ukraine, if measures are not implemented to reduce its prevalence. Smoking is a major cause of many chronic diseases, such as cardiovascular disease, respiratory disease, and smoking-related cancers. Over recent years, successful tobacco control policies in Ukraine have resulted in one of the fastest declines in smoking prevalence in the world (1) This is largely due to multifaceted tobacco control legislation, adopted from 2005 and subsequently upgraded. Ukraine ratified the WHO Framework Convention on Tobacco Control (FCTC) in 2006. Currently, Ukrainian legislation basically corresponds to FCTC requirements. In 2005, Ukraine adopted a first tobacco-control law. Since then, several additional tobacco-control policies have been implemented in the country. Smoke-free policies supported by media campaigns have covered many workplaces and public places since the middle of 2006. Under these policies, at least 50 percent of the area of restaurants and bars had to be isolated from the smoking area, so that tobacco smoke did not penetrate into smoke-free areas. This measure was supported by an intensive media campaign and public movement in favor of smoke-free policies. Many restaurants went completely smoke-free both before and after implementing this measure. As of December 2012, restaurants, workplaces, and other public places became 100 percent smoke-free. Designated smoking places, which figured in the legislation between 2006 and 2012, were abolished in the amended laws. As of late 2006, cigarette packs carried textual warning labels covering 30 percent of their surface, in place of a previous warning which covered 10 percent of the front surface and stated: ‘Ministry of Health warns: smoking is bad for your health.’ Since October 4, 2012, large (50 percent of the pack surface area), graphic health-warning labels on tobacco packaging have been introduced. The present report provides evidence from a modeling exercise undertaken to predict the health and related cost impacts that may stem from the implementation of a tobacco excise tax increase in Ukraine. Impacts are calculated relative to the status quo before the tax hike, and are modeled, beginning in 2017, for 2025 and 2035.Publication The Impact of Passive Smoking at Home on Respiratory Diseases : Results from the Indonesia 2001 National Survey Data(World Bank, Washington, DC, 2005-06)This study uses raw data covering over 17,000 people from the 2001 National Socio-Economic Survey (NSES) and 2001 National Household Health Survey (NHHS), including 3621 children under 10 years of age, to investigate the relationship between respiratory diseases and exposure to secondhand cigarette smoke through living in a home where people smoke. An important finding is that children under 10 years of age who live in homes where 30 or more cigarettes are smoked each day are significantly more likely to have various respiratory diseases than children who live in smoke-free homes.
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