Daily Archives: April 7, 2009

GLOBAL CIGARETTE AFFORDABILITY

According to conventional wisdom cigarette prices are much higher in high-income countries than in low- and middle-income countries. An understanding of cigarette price differences is useful in some situations, but prices by themselves are not necessarily a good indicator of affordability. Nevertheless, we consider cigarette prices in some detail, since it is the standard against which affordability measures are
compared. Cigarettes are, on average, between three and four times more expensive in high-income countries than in poorer countries. However, average US dollar prices in upper-middle-, lower-middle- and low-income countries are similar.
For high-income countries the coefficient of variation is 0.50
(mean = $4.42, standard deviation = $2.19) while among low- and middle-income
countries this coefficient is 0.46 (mean = $1.27 and standard deviation = $0.58).
Countries with high costs of living (e.g. Norway and Iceland) and those that have
taken strong tobacco control action (e.g. Australia, Canada, Ireland, New Zealand and
the United Kingdom) have the most expensive cigarettes. Among high-income
countries, Middle Eastern countries tend to have the cheapest cigarettes
Purchasing power parity (PPP) conversion rates quantify price differences (based on a
large basket of goods and services) between countries. PPP-adjusted cigarette prices
account for the fact that average price levels differ between countries, and as such it is
an alternative price measures. The average PPP-adjusted price among highincome
countries is about 60% higher than among middle- and low-income countries.
Average US dollar prices, calculated using PPP conversion rates, in upper-middle-,
lower-middle- and low-income countries are similar. Differences in average cigarette
prices between high-income and other countries are compressed when one uses PPPadjusted
prices vis-à-vis prices calculated with current exchange rates.
Do excise tax rate differences adequately explain the differences in retail prices?
Based on data published in a recent WHO report,16 we calculated a Spearman
correlation coefficient of 0.40 (n = 120, P < 0.001) between US dollar-denominated
retail prices (calculated using the current exchange rate) and the national excise tax
burden (i.e. excise tax as percentage of the retail price, but excluding provincial/state,

World Cost-of- Living Survey

Price data
Price data were drawn from the Economist Intelligence Unit’s (EIU) World Cost-of-
Living Survey (which documents prices of a range of goods and services) for the
period 1990-2006. Prices are collected in the first week of September each year. The
Survey included 103 cities in 69 countries in 1990, and 120 cities in countries in
2006. For most countries a single city is monitored. Where multiple cities were
surveyed,* an average price is calculated for the country.
The Survey considers the prices of Marlboro (or nearest international equivalent) and
a popular local brand, sold at high-volume supermarkets and mid-price retail outlets.
Since the emphasis is on affordability, the lowest of the four prices was selected for
each year, which was usually the local brand, sold at the supermarket.
The EIU collects price data in local currency. Calculating affordability measures do
not require that the price data be converted to a common currency, because income is
also collected in local currency. To compare cigarette prices between countries all
prices were converted to US dollar using two exchange rates: market exchange
rates on the day of the survey from the EIU, and purchasing power parity (PPP)
conversion factors from the World Bank’s World Development Indicators online
database.
Income data
While price is conceptually quite easy to comprehend, income is more complex. How
does one define income? Should one use a broad definition (e.g. per capita GDP) or a
narrow definition (e.g. after-tax income)? While a broad definition is less sensitive to
differences in tax regimes and government’s role in providing goods, services and
grants, a narrow definition is typically better understood by the public. Most people

Swedish Match and Philip Morris International announce global joint venture to commercialize smokefree tobacco products

Swedish Match AB [publ] and Philip Morris International [NYSE/Euronext Paris: PM] (PMI) today announced that they have entered into an agreement to establish an exclusive joint venture company to commercialize Swedish Snus and other smokefree tobacco products worldwide, outside of Scandinavia and the United States.

Syrian smokers puff away 600 millions

Smokers in Syria burn up about 600 million dollars on tobacco and cigarettes each year, despite a ban on advertising and smoking in public, according to statistics published on Monday.

NYC Losing $150 Million Yearly From Online Cigarette Sales

Representative Anthony Weiner and State Senator Jeff Klein released a report Sunday, April 5, showing that New York City is losing up to $150 million a year in tax revenue due to online cigarette sales.

Smokeless Tobacco Use

Smokeless tobacco products consist of tobacco or a tobacco blend that is chewed, placed in the oral cavity outside the gums, or inhaled or snorted through the nose rather than smoked. The Surgeon General reported that use of smokeless tobacco “is not a safe substitute for cigarette smoking, can cause cancer and a number of noncancerous oral conditions, and can lead to nicotine addiction and dependence.”1

Navy tightens tobacco restrictions for medical personnel

Most U.S. Navy medical personnel in the Pacific — military and civilian — will be banned from smoking or chewing tobacco anywhere during duty hours and while in uniform, in accordance with a recent Navy instruction.

Norway Aims to Ban Tobacco From Its Investment Portfolio

Norway intends to expand ethical rules for investing its vast surplus wealth to include bans on owning shares in tobacco companies and in the worst contributors to climate change, the wealthy oil-exporter’s finance minister said Friday.