THE DEMAND FOR TOBACCO PRODUCTS AT HOUSEHOLD

LEVEL IN PAKISTAN

Submitted by: Hira Qasim

Supervisor: Dr .Mehmmood Khalid
Co-Supervisor: Mr. Ajmal Jahangeer
Department of Health Economics
20th Nov 2015
o The tobacco consumption is possible by two ways, smoking and chewing.

o Globally the use of tobacco especially the cigarette consumption has been increasing
rapidly since the cigarettes were manufactured at the beginning of 20th century.

o Tobacco use in Pakistan is common and one of the highest in South East Asian
region (WHO report , 2013).

o Among few countries of the world, Pakistan is one where smokeless tobacco (chew
and raw tobacco) is widely consumed ( 2014 Global Report).

o The dilemma of tobacco consumption is prevailing around the globe but the ratio of
this habit is altered among different nation’s i.e. developing and developed
countries.

 The numbers of tobacco consumers are rising and will rise due to the rise in
population in the world (WHO, 2002).
 The use of tobacco is leading preventable cause of death in high income countries
where as in low and middle income countries it is increasing day by day (WHO report
2011).
 According to WHO 2011 report 32.4% males and 5.7% females are current tobacco
smokers in Pakistan.
 According to Coalition for Tobacco Control Pak (CTC), there are 22 million smokers
in the country and 55% of the households have at least one individual who smokes
tobacco.
 In Pakistan 1.8% females consumed any smoked tobacco and 4.6% used any
smokeless tobacco daily or some days of a week. The large proportion of males was
current smokers as 15.2% and among females it was less by 0.4 %( Gilani and Leon,
2012).
Source: Sreeramareddy et al, (2014)
 This study explores the effects of price of tobacco products on the demand
for tobacco products in Pakistan.

 Another objective of this study is to investigate the relationship of the

demand for tobacco in terms of different income levels in Pakistan.

 The socio-economic and demographic determinants of tobacco use in

Pakistan.
 The study tests the following null hypotheses:

 There is no association of price with tobacco consumption.

 There is no difference in tobacco consumption by income levels of

households.

 There is no difference in tobacco consumption between educated and

uneducated households.

 Presence of adult males and location in urban areas have no association

with tobacco consumption.

 Other Socio-economic and demographic variables influence the tobacco

consumption decisions.
 The tobacco expenditure is one of the major, especially in cigarette form, portrayed
health issues.

 No research is conducted yet simultaneously with the determinants of tobacco

consumption expenditures and the elasticities in the same are not studied at national
level including all four provinces.

 Not only poor consume various forms of tobacco but households who have higher
economic status consume more tobacco than lower economic group households.

 Different tobacco forms are price responsive in Pakistan and taxation could be used
as a possible tool of regulating tobacco consumption in Pakistan.
.
• The literature review confirms inverse relationship between
prices of tobacco products and tobacco consumed.
• Selvaraj.S , Karan.A , Srivastava.S found in India regarding price
elasticity of major tobacco products (cigarettes, bidi and leaf
tobacco) by income quintiles. They followed the theoretical
framework developed by Deaton (1988-1997).
• Rijo M John has also found that own-price elasticity estimates of
different tobacco products in India ranged between −0.4 to −0.9,
with bidis (an indigenous hand-rolled smoked tobacco
preparation in India) and leaf tobacco having elasticities close to
unity.
• Another study reflects on the price elasticity of tobacco and
shows that, cigarettes prices are an important factor of demand
for smoking as well as of smoking participation. According to
this study, estimated price elasticity was found -0.63 (kostova et
al. 2012).
• Another Study in India has revealed that We find that a
10% increase in bidi prices would reduce the demand for
bidis by about 6 to 9.5% ( Jha et.al, 2011).
• Ali Khan Khawaja and Muhammad Masood Kadir,
(2004) found in their study that, there is no association
between smoking status and different income group.
• Another study revealed that, the 10% increase in
cigarettes prices leads to 4.8% decrease in cigarettes
consumption in Pakistan (Mushtaq N, Mushtaq S, and
Beebe LA, 2011).
 Data
• Pakistan Social Living Standards Measurements (PSLM) survey (2010-
2011)
•

• The survey is conducted by Federal Bureau of Statistics and provides

information on 16341 households located across Pakistan. .

• The data provides information on household characteristics and

consumption of various food and non-food items including tobacco
products.
 Does not provide direct information of prices of tobacco
products

 Specific diseases due to tobacco consumption cannot be

estimated

 No information on tobacco spending at individual level,

hence individuals characteristics can not be included in
the model/analysis.
 Unit of Analysis: Household

 Descriptive analysis: uni-variate and bi-variate analysis,

Linear regression ( Ordinary Least Square )

Categories of Tobacco Products

• Cigarettes and Bidi,
• Chew and raw tobacco
• Pan prepared
• Choona khatta and supari etc.

 Total /Average Tobacco Expenditures along with socio-economic

determinants
Dependent Variable : Household consumed tobacco
Independent Variables:
 Age & gender of head of household
 Number of Adult males in the household
 Number of Adults in the household
 Number of youth in the household
 Education of the head of the household
 Work status of head of household
 Household income
 Illness of the head of the household
 Region
 Province
Linear regression technique is used to investigate determinants of
tobacco consumption.
Price Elasticity of Demand
 % change in quantity demand of a product / % change in
price of a product

Income Elasticity of Demand

% change in quantity demand of a product / % change in

income of a product
• The unit values i.e. prices which have been calculated to estimate
the price elasticities for tobacco products, followed Deaton Model
(1997).

• The unit values of each tobacco product namely (Bidi, cigarettes,

raw tobacco and pan) are used as proxy for their prices.

• The formula of unit values:

VU= V ( Values) / Quantities (Q)

• Unit Prices of Q1 ( Quantities consumed and Purchased) in the data.

Conventional Demand Model :

 Double Log demand model --known as log-log or log linear form

 Linear Regression

Own Price Elasticity is the price elasticity of demand (commonly

known as just price elasticity) measures the rate of response of
quantity demanded due to a price change.

The formula for the own price elasticity of demand (OPEoD) is:

OPEoD = Total % Change in Quantity Demanded

Total % Change in Price
Data Findings
Demographic and Socio- Economic Profiles of Tobacco
Consumers

Tobacco
Users
households,
7422 (45.4%)
Total
Households,
16341 Non-Tobacco
(100.0%) Users
households,
8919
(54.6%)
Percentage Distribution of Tobacco
Consumers by Gender
2.7%

Male
Females

97.3%
 Percentage Distribution of Tobacco users by Age Groups

40

35 37.5
35.1

30

25

20
20.1

15

10

5 7.2

0
15-29 30-44 45-59 60 +
 Percentage Distribution of Tobacco users by Educational
Status
60

50

50.4
40

30

23.1
20
15.8

10
4.5 3.9
1.8
0.4

0
No Education Primary Middle Secondary Intermediate Higher education Others
 Percentage Distribution of Tobacco users by Income
Groups

22.1
20.8
19.9
18.4 18.8

Poorest Poorer Middle Richer Richest

Percentage Distribution of Tobacco users by working and
non working status

Non-Working
15%

Working
85%
 Average Tobacco Consumption Expenditures per annum (in Rupees) by
Age and Gender

Expenditures Expendit Expenditures

Expenditures on on chew ures on on choona Average
Household's cigarettes ,Bidi tobacco and pan ,khaata and Tobacco
characteristics and lighters tobacco raw prepared supari etc Expenditures
Gender of the head
Males 343 56 14 26 439
Females 209 74 9 24 316
Age of the Head
15-29 294 43 17 28 382
30-44 334 44 11 25 414
45-59 358 57 15 28 458
60 and more 332 83 15 24 453
Chi- Square of Gender = 1.0, Chi- Square of Age = 0.04
 Expenditures on Expenditures on Expenditures on
Household's cigarettes and chew tobacco and Expenditures on choona ,khaata Average Tobacco
characteristics lighters tobacco raw pan prepared etc Expenditures

0 90 91 0 0 181

1-2 277 46 15 29 367

3-4 350 53 12 25 440

5 and more 393 75 14 25 507

Average Tobacco Expenditures by Numbers of Adult

Expenditures on Expenditures on Expenditures on
Household's cigarettes and chew tobacco and Expenditures on choona ,khaata Average Tobacco
characteristics lighters tobacco raw pan prepared etc Expenditures

1-2 292 40 12 23 366

3-4 310 53 14 27 404

5 and more 399 71 14 27 511

Household's Expenditure Expenditure Expenditure Expenditure Average
characterist s on s on chew s on pan s on choona Tobacco
ics cigarettes, tobacco and prepared ,khaata and Expenditure
Lighters tobacco raw Supari etc s
and Bidi
0 319 48 11 25 403

1-2 323 56 15 27 420

3-4 395 70 13 25 503

5 and more 414 70 21 40 544

Household's Expenditures Expenditures Expenditures Expenditures Average
characteristics on cigarettes, on chew on pan on choona Tobacco
lighters and tobacco and prepared ,khaata and Expenditures
Bidi tobacco raw Supari etc
Punjab 365 61 8 3 437
Sindh 407 11 31 75 524
Khyber 85 145 0 1 231
Pakhtunkhwa
Baluchistan 455 29 7 13 504

Household's Expenditures Expenditures Expenditures Expenditures Average

characteristics on cigarettes, on chew on pan on choona Tobacco
lighters and tobacco and prepared ,khaata and Expenditures
Bidi tobacco raw Supari etc
Rural 335 70 6 18 428

Urban 348 33 27 41 450

Household's Expenditures Expenditures Expenditures Expenditures Average
characteristic on cigarettes, on chew on pan on choona Tobacco
s lighters and tobacco and prepared ,khaata and Expenditures
Bidi tobacco raw Supri etc
No education 305 68 10 21 403

Primary 371 49 12 28 460

Secondary 345 51 18 26 439

Middle 404 31 21 49 506

Intermediate 457 28 26 52 564

Higher 464 20 36 55 575

education
Others 781 32 1 0 815
Household's Expenditures Expenditures Expenditures Expenditures Average
characteristic on cigarettes on chew on pan on choona Tobacco
s and Bidi tobacco and prepared ,khaata and Expenditures
lighters tobacco raw Supari etc

Poorest 221 61 6 15 303

Poor 290 52 8 23 373

Middle 329 54 12 30 425

Rich 378 57 20 28 482

Richest 483 60 22 35 600

 Average Unit values/Prices of Tobacco Products by Income
Quintiles
Regression Results
Ordinary Least Square Regression of the Determinants
of Total Tobacco Expenditures
 Own Price and Income Elasticities of Cigarettes and Bidi
Explanatory Variables Beta Coefficients T values Significant values
Male Head 1 -0.21 -0.81 0.42
Age (in complete years) 0.00 0.25 0.81
Square of head age -1.69 -0.10 0.92
Number of Adults in the
household 0.09 2.38 0.02**
Number of Adult Males in
the household -0.01 -0.40 0.69
Number of youth in the
household -0.05 -1.22 0.22
Primary 2 0.09 0.88 0.38
Middle2 -0.03 -0.35 0.73
Secondary2 -0.20 -1.73 0.09***
Intermediate2 -0.06 -0.42 0.68
Higher Education2 -0.35 -1.84 0.07***
Others2 -1.01 -1.44 0.15
worked status 3 0.07 0.59 0.56
illness in household 4 -0.13 -2.01 0.05**
Log of the unit price of
cigarettes and Bidi -0.29 -3.14 0.00*
Log of the Income Level 0.06 0.79 0.43

Urban 5 -0.13 -1.54 0.13

Sindh 6 0.05 0.47 0.64

Khyberpakhton 0.34 0.47 0.64

Baluchistan -0.416 -3.07 0.002**

Constant 3.06 3.51 0.0*

 The tobacco consumption is mostly done by males than the females and
there was a negative association between age and tobacco consumption.

 The tobacco expenditures on cigarette, lighters and bidi are high among all socio
economic and demographic determinants than other tobacco products.

 The demand for cigarettes and bidi is price inelastic, chew tobacco is price elastic
and pan is inelastic, but the demand for pan is more inelastic than cigarettes and
bidi.

 The income elasticitiy of pan is highly inelastic than the other tobacco products.
 The policy legislators have implemented the laws on tobacco use but still there
needs to take more policy actions.

 There should be an increase in the price of Pan, Gutka and chalia as well.

 The advertisement for tobacco use losses should be enhanced. There should not
only be a picture on the cigarette packs but banners of the same should also be
placed in public places as well.

 There should be strict vigilance on the supply of tobacco products in all public
areas.

 There should be a strict pricing policy on cigarette consumption; as a result

cigarette consumption could be reduced not only among higher income groups but
in lower income group as well.

 There should be a direct taxation imposition on the tobacco industries,

 It should be carried out with an individual perspective, which will be covered by the
analysis on all individuals in the households.

 This study could be further enhanced by analyzing the estimations of price and
income elasticities for income quintiles .

 The analysis could be done separately at provincial and regional level in Pakistan.

 The research deals with the various factors but it neglected the tobacco related
diseases, so there should some effort in reporting the diseases.
 Selvaraj.S , Karan.A , Srivastava.S, 2009-2010. Price Elasticity of Tobacco
Products among Quintile Groups in India, 2009-10
 Ali Khan Khawaja and Muhammad Masood Kadir, 2004. Smoking among adult
males in urban community of Karachi, Pakistan. The Aga Khan University
Karachi.vol 35(4).
 Burki et.al, 2013. The Economies of Tobacco and Tobacco Taxation in Pakistan.
 Coalition for Tobacco Control Pak, http://ctcpak.org/ .
 Deaton, AS (1997). The Analysis of Household Survey. John Hopkins University
press for the World Bank Baltimore.
 Mushtaq N, Mushtaq S, and Beebe LA (2011). Economics of tobacco control in
Pakistan: Estimating elasticities of Cigarettes demand. Tobacco Control, 20(6),
431-5.
 Riji M john (2008) . Price Elasticies estimates for tobacco products in India. Health
policy plan.
 World Health Organization. Tobacco or health: a global status report .WHO, 1997.
 Assessment of Economic Costs of Smoking. World Health Organization (2011).
Economics of Tobacco Toolkit.
 WHO/ World Health Statistics, (2013).
THANKS