Tobacco Usage at Household Level in Pakistan: Estimating Price and Income Elasticities of Tobacco Products

Abstract

Despite persistent efforts for tobacco control, low-income countries are still facing challenges to implement tobacco control policies and programs successfully. The present study aimed to examine the household sector's tobacco usage and estimate price and income elasticities for policy measures to reduce tobacco use in Pakistan. The descriptive statistics, t-test for equality, and log-log model were applied to the PSLM 2018-19 surveys to investigate the magnitude, disparities, and effect of income and prices on quantity consumption of cigarettes, chewing, and other tobacco in terms of income and price elasticities. The results show that low-income households consume more cigarettes, chewing tobacco, and other tobacco products than households in the middle-income and high-income categories. The income elasticity of cigarettes is positive but less than unity, indicating that cigarettes are treated as a necessity commodity by households. The own price elasticity for cigarettes, chewing tobacco, and other tobacco products is negative and less than unity, suggesting that tobacco products are inelastic. The cross-price elasticity provides mixed results, i.e., it can be both substitute and complement. Imposing an income tax on cigarette users could also be a policy strategy for reducing the number of cigarette and chewing tobacco users in Pakistan and the health risks associated with their usage.