Many Americans are kicking the cigarette habit. However it is concerning that many of them are turning to what economists call ‘product substitution’. Cigars and pipes are just tobacco with a folksier feel. It seems that freeing the nation from the tobacco addiction is more difficult to achieve than previously thought.
Thursday before last the American Centers for Disease Control and Prevention, or CDCs made this point clear in a report. In total the inhaling of tobacco products in the first decade of this century went down by more than 27%. Good news you might think, but then the use of tobacco in products other than cigarettes soared by almost one and a quarter times in the same time frame.
Another relevant economic concept is ‘price elasticity’. This means how much demand changes in response to price changes. For addictive products like cigarettes we need a big price hike to gain a minimal quitting effect and on the down side we only need a small price cut to get disproportionate take up in use. So the credit crunch and subsequent recession has cut the price of cigars and pipe tobacco with a consequent increase in consumption.
In 2009 the duty on cigars, pipe tobacco and loose tobacco products became much lower than that on cigarettes. These value comparisons have not been lost on ‘Big Tobacco’ and have contributed significantly to the public health problem of tobacco use, according to the CDC.
The associate director of science at the CDC explains it like this, “Cigarette-like (tobacco products), formerly thought of as small cigars, have been modified slightly by the manufacturers …. So that they can be taxed at the lower rate,” The director of the CDC’s Office on Smoking and Health says, “The rise in cigar smoking, which other studies show is a growing problem among youth and young adults, is cause for alarm.”
The unintended consequences of the tax changes and the sluggish economy seems to make the cigarette size cigars much cheaper at around $1.4 per pack, compared to $5 per pack for the traditional cigarettes. The consumption patterns of teenage smokers in particular are following the product substitution, price inelastic route.
The US Surgeon General is often heard to cite a report that proves that almost 100% of tobacco addicts begin the habit in their teens and way before they reach 26 years. It is no wonder that public health officials and the marketing departments of Big Tobacco are fighting a pitched battle for the lungs and minds of these young consumers.
Sadly the CDC still sees tobacco of all kinds; cigarettes, cigars and pipe smoking as the biggest single cause of preventable mortality and serious health conditions in America, year after year. Even more dispiriting is the fact that Big Tobacco sees tobacco of all kinds as the money crop it always was. The mortifying effects of continued tobacco use are well known.
[box type=”note”]Cigars and pipes cause heart disease, lung cancer, many other types of cancer, reproductive defects and it exacerbates all other chronic diseases. The cost in direct health care alone borne by the smoking and the non-smoking public alike is a staggering $193 billion per annum.[/box]