title: Price elasticity of tobacco products among economic classes in India, 2011-2012.
abstract: OBJECTIVE
  The objectives of this study are to: (1) examine the pattern of price elasticity of three major tobacco products (bidi, cigarette and leaf tobacco) by economic groups of population based on household monthly per capita consumption expenditure in India and (2) assess the effect of tax increases on tobacco consumption and revenue across expenditure groups.
  
  
  METHODS
  Data from the 2011-2012 nationally representative Consumer Expenditure Survey from 101,662 Indian households were used.
  
  
  METHODS
  Households which consumed any tobacco or alcohol product were retained in final models.
  
  
  METHODS
  The study draws theoretical frameworks from a model using the augmented utility function of consumer behaviour, with a two-stage two-equation system of unit values and budget shares. Primary outcome measures were price elasticity of demand for different tobacco products for three hierarchical economic groups of population and change in tax revenue due to changes in tax structure. We finally estimated price elasticity of demand for bidi, cigarette and leaf tobacco and effects of changes in their tax rates on demand for these tobacco products and tax revenue.
  
  
  RESULTS
  Own price elasticities for bidi were highest in the poorest group (-0.4328) and lowest in the richest group (-0.0815). Cigarette own price elasticities were -0.832 in the poorest group and -0.2645 in the richest group. Leaf tobacco elasticities were highest in the poorest (-0.557) and middle (-0.4537) groups.
  
  
  CONCLUSIONS
  Poorer group elasticities were the highest, indicating that poorer consumers are more price responsive. Elasticity estimates show positive distributional effects of uniform bidi and cigarette taxation on the poorest consumers, as their consumption is affected the most due to increases in taxation. Leaf tobacco also displayed moderate elasticities in poor and middle tertiles, suggesting that tax increases may result in a trade-off between consumption decline and revenue generation. A broad spectrum rise in tax rates across all products is critical for tobacco control.
authors.affiliation: Health Economics Unit, Public Health Foundation of India, New Delhi, India.
authors.forename: Sakthivel
authors.initials: S
authors.lastname: Selvaraj
authors.affiliation: Health Economics Unit, Public Health Foundation of India, New Delhi, India.
authors.forename: Swati
authors.initials: S
authors.lastname: Srivastava
authors.affiliation: Indian Institute of Public Health Delhi (IIPHD), Public Health Foundation of India, New Delhi, India.
authors.forename: Anup
authors.initials: A
authors.lastname: Karan
mesh_terms: D003132:Commerce; D003258:Consumer Behavior / Q000191:economics*; D006801:Humans; D007194:India; D012923:Social Class; D013660:Taxes; D062789:Tobacco Products / Q000191:economics*
keywords: HEALTH ECONOMICS; PUBLIC HEALTH; STATISTICS & RESEARCH METHODS