Impact of affordability on cigarettes consumption in Kosovo
Authors: Besnik Prekazi M.A, Albulena Xhelili Berisha PhD́
Tirana, November 2, 2022
Introduction and background
- Kosovo is an upper-middle-income country, with a GDP per capita $4,986
- High prevalence and very low tobacco prices
- The estimate for the coefficient associated with affordability is highly significant with a negative sign across different specification whether we use price or unit value and STC-SEE data or HBS data.
- Affordability is expected to affect tobacco consumption and the negative sign of the estimate indicates that lower affordability is related to lower tobacco consumption in Kosovo. The size of the effect though changes whether we are using affordability measure based on price or based on unit value, the earlier one presenting a smaller effect and the latter one a larger one.
- On average the results suggest that a 1% reduction of cigarette affordability is followed by a 0.13%-0.15% reduction on cigarette consumption in Kosovo if we are using unit values or 0.03%-0.05% reduction if we are using prices.
- From the control variables, the estimate for the coefficient associated with gender is highly significant with a positive sign suggesting that males consume around 0.4% more cigarettes in Kosovo.
- The coefficient related to the variable controlling for employment, is significant across three specifications with varying size, suggesting that employed people consume around 0.2%-0.7% more than unemployed ones in Kosovo.
- The estimates associated to the level of education are also statistically significant although with varying sign across specifications. The results suggest that those with secondary education consume more than those with primary for around 0.3%-o.6% (with the exception of affordability based on unit values using HBS data which suggest they actually consume less for about 0.6%). And across all specifications results suggest that people with tertiary education consume less for about 0.3%-0.9%.
- The estimates associated to control variable for urban area is statistically significant only when using unit values and suggest that those residing in urban areas smoke more.
- The increase in tobacco taxes must discourage the increase in demand for cigarettes as a response to increase in income, and therefore make them less affordable.