Welfare analysis of a zero-smoking policy - A case study in Japan

Drug Discoveries & Therapeutics
Yuuki NakamuraMiwako Kamei

Abstract

Smoking cessation efforts in Japan reduce smoking rates. A future zero-smoking policy would completely prohibit smoking (0% rate). We therefore analyzed the social welfare of smokers and non-smokers under a hypothetical zero-smoking policy. The demand curve for smoking from 1990 to 2014 was estimated by defining quantity as the number of cigarettes smoked and price as total tobacco sales/total cigarettes smoked by the two-stage least squares method using the tax on tobacco as the instrumental variable. In the estimation equation (calculated using the ordinary least squares method), the price of tobacco was the dependent variable and tobacco quantity the explanatory variable. The estimated constant was 31.90, the estimated coefficient of quantity was - 0.0061 (both, p < 0.0004), and the determinant coefficient was 0.9187. Thus, the 2015 consumer surplus was 1.08 trillion yen (US$ 9.82 billion) (95% confidence interval (CI), 889 billion yen (US$ 8.08 billion) - 1.27 trillion yen (US$ 11.6 billion)). Because tax revenue from tobacco in 2011 was 2.38 trillion yen (US$ 21.6 billion), the estimated deadweight loss if smoking were prohibited in 2014 was 3.31 trillion yen (US$ 30.2 billion) (95% CI, 3.13 trillion yen (US$ 28.5 billion)...Continue Reading

References

Mar 4, 2003·Tobacco Control·H Y KangH W Park
Aug 31, 2004·Tobacco Control·W MaxL Miller
May 26, 2006·Tobacco Control·H-Y SungY Jiang
Jun 13, 2015·Social Science & Medicine·Deliana Kostova, Dhaval Dave
Apr 2, 2016·Bulletin of the World Health Organization·Mark GoodchildNigar Nargis

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