1. Tobacco: health effects, and socio-economic issues
Joy de Beyer
Tobacco Control Coordinator
World Bank
Lecture at George Washington University, October 24, 2001

2. Diseases caused by tobacco use
Lung cancer
COPD (emphysema, bronchitis, etc)
Stroke (bleeding in the brain)
Heart attack and heart disease
Narrowing and clogging of arteries
Cancers of mouth, throat, larynx, esophagus
Other cancers – bladder, kidneys, pancreas
Peptic ulcers (stomach bleeding)
Respiratory infections and compromise (cough, wheezing etc)
Gum disease and tooth loss
Low birth weight and SIDS
Asthma
Ear infections
Compromised sexual performance
Greater susceptibility to TB?
Enormous body of evidence for these and other diseases. Smokers have a MUCH greater relative risk for many of these diseases than non-smokers.

3. Why does tobacco kill? Burns at 1000o C
Cig smoke has > 4,000 chemicals, 43 known carcinogens/harmful substances (tar, cadmium, lead, cyanide, nitrogen oxides, benzo(a)pyrine, carbon monoxide, vinyl chloride, acetaldehyde…. )
Damages tissues throughout the body, clogs arteries, causes blood clots/bleeding
Nicotine is a highly toxic substance. In addition, the combustion as a cigarette burns releases thousands of toxic gases and particles, which are very quickly absorbed into the body. The organs involved in excreting wastes also get doses of the toxic substances. So the impact is very widespread, causing multiple diseases and insult to many parts of the body. Hence the long list of diseases.

4. Are some cigarettes better?
No such thing as a safe cigarette
“light”, “low tar” cigarettes are deceptive –
- Manipulation by maker
- Compensation by smokers so actual yields not = FTC (machine) yield
Nicotine content is very carefully calibrated – nicotine is removed from tobacco, and then added back in carefully controlled amounts to maximize addiction. Ammonia added to speed the absorption of the nicotine. Cigs deliver constant amounts of nicotine.
“A cigarette is a highly engineered nicotine delivery device”
FTC Federal Trade Commission did tests , since then the industry does the tests itself, to FTC standards. Method uses machines. Place cig into holder and light it, then 35 ml simulated puffs are taken via syringe over 2 seconds, once every minute, until cig reaches specific butt length. Smoke is collected and passed through a filter that allows particulate matter (tar and nicotine) to be collected. Gases that pass through the filter are collected and used to determine levels of carbon monoxide (and other things).
Ways to lower the FTC yields - longer filter (esp for tar), narrower cig, shorter cig, faster burn rate of the paper, dilute smoke with air vents, less tobacco.
Could also reduce nicotine, but tests show that so called “low yield” cigs have more, not less nicotine.
Smokers: cover ventilation holes, draw longer, deeper puffs, and more often. Studies of actual intake of nicotine, tar and carbon monoxide etc measured in smokers show practically no correlation with machine yields.
Is a bottom limit: tar < 1 mg, nicotine <.1 mg – makes it difficult for smokers to get satisfaction.

5. Adult Per Capita Cigarette Consumption and Major
Smoking-and-Health Events -- United States,
1st Surgeon
General’s Report
Number of Cigarettes
Source: USDA; 1986 Surgeon General's Report
Great Depression
End of WW II
Nonsmokers
Rights
Movement
Begins
1st Smoking-
Cancer Concern
Fairness Doctrine
Messages on TV
and Radio
Federal Cigarette
Tax Doubles
Master
Settlement
Agreement
Broadcast
Ad Ban
Marlboro
Friday
There are 48 million smokers in the US today, and 430,000 deaths each year.
There has been debate and research on the toxic effects of tobacco since (King James I dismissed claims about curative effects, condemned smoking as “loathsome to the eye, hateful to the nose, harmful to the brain, dangerous to the lung, and the black stinking fumes thereof, nearest resembling the horribley Stygian smoke of the pit that it bottomless” (A Counter-Blast to Tobacco). Samuel Pepys wrote in 1665 about a Royal Society experiment in which a cat was fed distilled oil of tobacco and promptly died…..
1964 Surgeon General’s report – very influential. A landmark in policy and attitudes to tobacco use. Note how consumption in the use starts to decline after the mid-60’s.
1998 Minnesota lawsuit
Average # of cigs smoked has changed dramatically
1900: 54 cigs /yr
1939: 61% prevalence among adults
1963: (2/3 pack/day)
28% adult prev, or 1/3 pack/day
Also millions of people exposed to “secondhand“ smoke – 16 million children in US, incl 40% of all children under million have asthma 700 million children worldwide are exposed to smoke – nearly half of the world’s children.

6. Global Trends in tobacco use
1.1 billion smokers, 80% in low- and middle income countries (1 in 3 adults)
1.6 billion by 2025
85% of all tobacco used is smoked
(cigarettes, bidis, kreteks)
Set against declining consumption in the US (and many other high-income countries), world wide, numbers of smokers are growing because of population growth, and increase in consumption (aggressive advertising, rising incomes)
use as snuff, chewing, and in pipes is falling)

7. Smoking is increasing in the developing world
Male adult prevalence, 1995
US % (was 61% in 1939)
East Asia %
Europe, Central Asia 57 %
Latin America, Caribb 40 %
South Asia 41 % (cigs + bidis)
Sub-Saharan Africa 29 %
South Asia – half cigs, half bidis
All low and middles income countries – 49%
All high income countries – 38%
World – 47%

8. Burden of Tobacco Deaths Shifting
World: Annual Tobacco deaths (in millions)
Developed ~3
Developing ~ ~7
World Total ~10
1 in 2 long-term smokers killed by their addiction
1/2 of deaths in middle age (35-69)
Tobacco killed an estimated 4 million people worldwide in 2000, about 7% of all deaths.
By 2030, tobacco will be responsible for ten million deaths per year, and 70% of these deaths will be in the developing world, and 30% - 3 million- in developed countries. By then, tobacco will cause almost 11% of all deaths in the developing world, and 17.7% of all deaths in developed countries.
Half a billion people now alive will be killed by tobacco products, and half of the deaths will happen prematurely.
Every 8 seconds someone dies as a result of tobacco use

9. Tobacco deaths are on the increase in India
Tobacco deaths tend to be grossly under estimated, because “tobacco” is not listed among the causes of death. Efforts in some countries to record tobacco use on death certificates, to be able to attribute deaths more accurately. Difficulty in making the estimates shown by the huge differences in the estimates made by WHO, Prakash Gupta (a distinguished Indian epidemiologist) and the Indian Council for Medical Research. WHO estimates look very conservative, and the national estimates show a substantial contribution from tobacco to Indian death (and disease) burden.

10. Smoking is more common among the less educated Smoking prevalence among men in Chennai, India, by education levels
This is a fairly common pattern across much of the world. Its much harder to reduce smoking prevalence among people with low education, who probably are less exposed to information, and social pressures not to smoke.
Source: Gajalakshmi and others, background paper

11. Nicotine is highly addictive
Nicotine --> release of serotonin, dopamine, norepinephrine
Neuro-adaptation
Each year, nearly 35 million people make a concerted effort to quit smoking. < 7% stay smoke-free for a year; most start smoking again within days.
Strong physical and emotional reactions – feelings of pleasure, relaxation, alertness etc
Takes seconds for the nicotine to reach the brain and stimulate the release of hormones. Ammonia speeds this uptake, which is why its added to cigs. Rapid behavioral reinforcement enhances the addiction.
Nicotine distributes extensively to other body tissues, and is released slowly.
“Half life” of nicotine in the blood is 2-3 hours (takes that long for nicotine level to half). After a single use, nicotine remains in body 8-12 hours. With repeated smokes, nicotine levels accumulate over 6-8 hours, and then plateau. Overnight, they gradually fall, leaving smokers primed and ready for a huge effect from the first cig the next day.
Neuro-adaption: brain develops more nicotine receptors, and so needs increasing amounts of nicotine to achieve the same effects. Constant amount of nicotine seems to give less and less of a “rush”. Brain gets used to nicotine, and needs it to function normally.

12. Helping smokers to quit Cessation Treatments
Cessation support from health professionals is key
NRTs double the effectiveness of cessation efforts
Quit lines, community support, etc., also work
Governments may increase accessibility and affordability of NRTs by:
OTC sales, allowing advertising, licensing
Conducting more studies on cost-effectiveness (especially in low/middle income countries)
Considering NRT subsidies for poorest smokers
Evidence shows that many smokers want to quit smoking and have tried at least once to quit. About 2% of US smokers quit each year. Most quits are unaided, but there are therapies that help improve the success rate of quit attempts – eg NRT can double the success rate of quit attempts.
It is important to help those who want to quit. Nicotine replacement therapy (NRT) and other cessation interventions markedly increase the effectiveness of cessation efforts and also reduce individuals’ withdrawal costs. Yet in many countries, NRTs are difficult to obtain. (unlike cigarettes!)
Evidence also shows that advice from health professionals to patients to quit can make a substantial difference, but there is also a clear need in many countries to reduce the number of smokers among health professionals themselves. .
NRT – patches, gum, nasal spray, inhalors
Anti-depressant drugs (eg bupropion)
NRT safe, but highly regulated.
Also – physician advice helps, so does community support, Quit lines (cost effective).

13. Unless current smokers quit, smoking deaths will rise dramatically over the next 50 years
CESSATION crucial for impact on deaths and disease, because most tobacco deaths in the next 30 years are among people who are already smokers (because most – but not all--- of the disease take 20 or so years to develop.
Smokers who quit get some immediate health gains/reduction in risks, and then gradually over about 5 years, lower also other risks to pretty much the same level as non-smokers.
Source: Peto and others, 1994; Peto, personal communication.

14. Effective Interventions
Information
Health warnings on tobacco products
Comprehensive bans on ALL advertising and promotion
Smoking bans in public places (including work places)
Cessation support

15. Comprehensive advertising bans reduce cigarette consumption Consumption trends in countries with such bans v. those with no bans (n=102 countries)
Source: Saffer, background paper

16. Taxation is the most effective measure
Higher taxes induce quitting and prevent starting
A 10% price increase reduces demand by:
4% in high-income countries
8% in low or middle-income countries
Young people and the poor are the most price responsive
Tax increases that raise cigarette prices are the single most effective way to reduce consumption. When used together with other interventions, the impact is likely to be even stronger. There is clear evidence that higher cigarette prices lead some people to quit (or try and quit, or think about quitting), other reduce their consumption, some switch to cheaper brands. On average, a 10% increase in price reduces cigarette consumption by 4% in high-income countries and 8% in low- and middle income countries.
People with low incomes – including especially young people – are more sensitive to higher prices. This makes sense intuitively, and is consistent with the evidence. Most smokers begin before they are 20. Higher prices reduce cigarette consumption among young people, and deter or delay others from starting to smoke. That delay results in lower prevalence rates at all ages, and makes it easier for people to quit, reduces health risks and health care cost in the future.

17. Price Elasticity Evidence As real price decreases, consumption increases Evidence from South Africa
Some country examples. In South Africa, the Apartheid regime had close links with the cigarette industry, and left tax rates low. Inflation was relatively high during the 1970s and 1980s, and prices and taxes were not adjusted to match inflation. So the real price (adjusted for inflation) decreased sharply. And consumption rose steadily. I’m pleased to say that the situation has changed dramatically in recent years, since the new Government has raised tobacco taxes sharply, and also introduced several other measures to reinforce their effect. And they received strong public support for these new policies.

18. Evidence from the UK
Here is evidence from the UK. We observe reductions in tobacco consumption with increases in the real price over the last thirty years in the UK. The same picture san be seen in many other countries that have raised tobacco taxes, causing the real price of cigarettes to rise.

19. Why do policy makers resist tax increases? Will higher tobacco taxes:
Reduce revenues ?
Tobacco is a good source of revenue. Revenues rise as a result of higher taxes
Cause job losses ?
Farmers, tobacco industry workers, others
Increase smuggling ?
smuggling loses revenues, and is a crime
Hurt poor smokers ?
Higher taxes will reduce cigarette consumption and improve public health. But governments have other considerations as well, and there are many stakeholders who fear the impact of lower tobacco consumption. Ministry of Finance worries that higher taxes might result in lower total tax revenues. Labor and Agriculture worry that higher takes may lead to lower employment in agriculture and industry. And the most common argument is that higher taxes will motivate smuggling.

20. Tobacco Taxes generate Revenues
Tobacco taxes are an enormous source of revenue – hence the concern about the impact of changing tax rates, on total revenues. Some examples follow:
EU countries collect from US$ 5 billion to over US $18 billion from cigarettes only.
Can be up to 10% of TOTAL Govt revenues (eg China, Turkey, Bulgaria, Romania, Ukraine….

21. Tobacco Taxes- Important source of revenue!
As you can see from this graph, tobacco taxes are a significant share of total government tax revenue in most ECA countries.

22. As Cigarette Tax Rises Revenue Increases Tax per pack and cigarette tax revenues in Norway,
The biggest concern, especially raised by the MOF, is whether higher taxes will reduce total revenues. The evidence for over 100 developed and developing countries has been carefully reviewed, and so far, every single country that increased its tobacco excise rate also saw total revenues increase. Here is one example from a developed country, Norway, where even at very high tax rates, and very high cigarette prices, and with many other measures all trying to reduce consumption, tax increases keep generating more revenues.

23. Revenue Generating Potential of Tobacco Taxes
As price rises, consumption falls, but by less than the percentage rise in price (demand is price-inelastic).
As incomes rise, so does consumption - and total revenue (the income elasticity of demand is greater than one).
Production can be closely supervised by the government – easy to collect taxes.
This is because as taxes (and hence prices rise) consumption falls – but by a proportionately smaller amount than the price rise. So although sales are lower, the tax take per sale is higher, and so is total tax revenue.
The less elastic the demand, the less effective the tax will be in reducing cigarette consumption, but the more the gain in tax revenues.
The product or service is considered a luxury rather than a basic necessity. Not only does consumption of luxury goods and services rise as income rises, but typically rises even faster than the rise in income.
This reduces the chance of tax avoidance.

24. Cigarette tax levels are lower in low or middle-income countries
Suggests considerable scope for raising taxes and prices in many countries.
Source: Authors’ calculations

25. Huge variation in tax rates, even across countries that are quite close (geographically) or relatively similar in economic development. This slide shows huge variation in Africa.

26. Total Tobacco Taxes as % of Retail Price in Mediterranean Countries
The level of tax rates and the price level are mixed in the developing Med. Countries. There are high priced but low taxed Algeria, high tax rate but low prices in Turkey, Egypt and Jordan, high price and high tax rate in Tunisia, and low tax, low price in Lebanon and Syria.

27. Low cigarette prices in Eastern Europe
In Eastern Europe, prices are low – and these are prices of the most popular brand. Many countries have some brands that sell for only a few cents per pack.

28. Studies on the employment effects of dramatically reduced or eliminated tobacco consumption
Type of Country
Name and year
Net change as % of employment in base year
Net Exporters
US (1993) 0%
UK (1990)
0.5%
Zimbabwe (1980)
-12.4%
Balanced Tobacco Economies
South Africa (1995)
0.4%
Scotland (1989)
0.3%
Net Importers
Bangladesh (1994)
18.7%
If tobacco consumption falls, there may indeed be some job losses, among farmers, people who work in cigarette factories, advertisers, and people who specialize in distributing and selling tobacco products. But the money that used to be spent on cigarettes does NOT disappear from the economy. When people cut back their smoking or quit, they spend the money they save on other things – they eat out more (or just eat more), they join a health club, buy a bicycle, pay school fees or buy shoes for their children, and so on. This generates new jobs in other sectors. And in countries where this expenditure switching has been carefully studied, more often than not, there are more new jobs created than there are jobs lost.
The more a country imports tobacco products, and the more labor-intensive (relative to tobacco product production) are the things that tobacco money is spent on instead, the more likely that a fall in tobacco consumption will INCREASE total employment.
Of course, there are winners and losers. Some people will lose jobs and income, others will gain, and I don’t want to pretend that this isnt a major concern. But it is not something unique to tobacco – we have to deal with changes in consumption patterns and other economic adjustments all the time.
Source:Buck and others, 1995; Irvine and Sims, 1997; McNicoll and Boyle 1992,
van der Merwe and others, background paper; Warner and others 1996

29. What about Smuggling? More smuggling if : Public is tolerant
Controls are weak
corruption in the country is high
tobacco industry is complicit
organized crime plays a big role
Smuggling is a big problem in many countries – but not just smuggling of cigarettes. It is a complex issues, which I am not going to go into much. But there are some key points to make. It is not JUST high taxes or high tax differentials that lead to smuggling. Certainly they provide an incentive. But the overall level of corruption is at least as important a factor in predicting how much smuggling of cigarettes there is in a country.
Smuggling involves internationally well-known brands (not usually local brands), and there is strong evidence that the industry has been complicit in smuggling in many countries – evidence strong enough to win convictions in several court cases. And its important to remember that the supplies of cigarettes come from large international companies. The cigarettes are sold for export to country X, but “disappear” somewhere along the (often complex) multi-country transport routes. Making manufacturers responsible for paying taxes until the exported cigarettes reached their legally intended destination (as Canada is experimenting with) might have a significant effect in reducing smuggling.

30. Tobacco smuggling tends to rise in line with the degree of corruption Smuggling as a function of transparency index
Smuggling is the most common argument against raising tobacco taxes. Smuggling is an issue in almost every country regardless of the level of their tobacco tax rate. Taxes are by no means the whole story, or even the most important factor in smuggling. This slide shows clearly that countries with high levels of crime, bribery and corruption (low transparency) have high rates of smuggling of cigarettes (and many other commodities). The level of corruption is more important in explaining smuggling of cigarettes than tax rates or tax differentials.

31. Smuggling: What is the Solution
Smuggling: What is the Solution? Canadian Government reduced tobacco tax rates dramatically in February 1993
I’ve said that taxes are not the whole story when talking about smuggling. But one often hears that taxes are to blame for smuggling, and some governments have been persuaded that if only taxes were not so high, smuggling would fall. In Canada, smuggling became a major issue. So in 1993, the Canadian government reduced the rate of tobacco tax. [ smuggling did decline, but there are many other factors, and we might just mention that the Canadian Government has taken some tobacco companies to court, arguing that they have had a major role in smuggling] But there were 2 very negative results of the REDUCTION in tobacco taxes – total revenues fell (which is not shown on this slide) and total consumption rose dramatically – especially among young people.

32. Smuggling Sweden decreased cigarette taxes (17%) due to fear of smuggling in 1998
In 1998 Sweden also reduced its (very high) tax rates, hoping that smuggling would fall and revenues would rise. But as you can see, 1998 was one of the few years in which revenues fell, despite the big jump in consumption – also a result of the price fall that year. We don’t know what happened to smuggling, because for obvious reasons there are no hard data on smuggling, but given the fall in revenues, we can deduce that it did not fall.
Almost every time - in every country- that tobacco tax increases begin to be discussed, someone argues that higher taxes will cause an increase in smuggling. And coincidentally, smuggling often increases even before a decision is taken. Is this a coincidence – or is someone with a strong vested interest trying to make a very strong point? I’ll just mention that there are quite a number of court cases in which tobacco companies are accused of involvement in smuggling.

33. What about the impact on poor smokers?
Poor smokers tend to spend the highest % of income on tobacco
How do they react to a tax/price rise ?
more likely to quit/reduce consumption, which will improve health outcomes, release income for other uses
increased tax revenue can be used in ways that benefit poor
Help smokers who want to quit
Not unusual for smokers that 2-10% of total expenditures are on tobacco products. Can be even higher. Big opportunity cost. But if taxes rise, greater revenues could be used for programs that benefit poor people (including health promotion and health care), neutralising or even overwhelming the possible negative effect of the price/tax increase. Moreover there is evidence beginning to be collected that indeed, poor smokers do cut consumption more strongly in response to a price increase, providing health gains.

34. High opportunity Cost: Evidence from Belarus
We could provide similar figures for other countries, but the point is clear. It is not unusual for smokers to spend between 2 and 10% of the family income on tobacco products, and for a poor family, that had a very high opportunity cost. If you told someone that you knew a simple way to increase their disposable income by 10%, I think most people would be very interested.

35. High opportunity cost: Evidence from Bulgaria
Here is another example from Bulgaria.

36. Allocating Tobacco Expenditure to Other Goods and Services Better Nutrition, Better Health: Evidence from Hungary
Tobacco imposes high opportunity cost to smokers, families and the society. Families could allocate tobacco expenditures to purchase other goods and services which would increase the health and well being of the family members. Here is an example from Hungary.

37. People do not know the risks of tobacco use
Why should governments intervene? Economic rationale – “market failures”
People do not know the risks of tobacco use
Most smokers start young – protect youth
Nicotine is VERY addictive
Tobacco users impose costs on others
second hand smoke harms non-smokers
children and infants need protection
health care costs (families and government)
opportunity cost for families
Some people argue that tobacco use should be an individual choice, and that governments have no right to intervene. But even economists who strongly believe in individual freedom and think that free markets are greatly preferable to government involvement, believe that there is a clear justification for governments to act to reduce tobacco use. There are 4 reasons:
smokers do not know the risks, or underestimate the risks that they themselves face. Eg 60% of smokers in China said that they think that smoking caused little or no harm. But this is just not right. Tobacco kills half of the all long-term users.
Most smokers start as teenagers. Very few smokers start after the age of 20. Many societies believe that children and teenagers do not make good decisions, especially do not take long term considerations into account, and should be protected. And a lot of advertising takes advantage of the vulnerabilities and insecurities of young people , giving the message that smoking will make them popular, “cool”, sexy, appealing to the opposite sex, grown-up etc.
Most people do not know how addictive nicotine is. Nicotine is just as addictive as heroine and cocaine. Most smokers think they will be able to quit whenever they want to, but most find it extremely difficult to do so. It often takes several attempts to quit. Most tobacco users say that they regret ever starting, wish that they could quit, and support tax increases, public smoking bans and other tobacco control measures.
There is growing scientific data on the negative effects of second-hand smoke. If people have the right to choose to smoke, surely people also have the right to choose NOT to have to inhale the smoke from others’ cigarettes. We know that pregnant women who smoke can retard fetal growth, have babies that are much more likely to die as infants, and to suffer from respiratory and other diseases. Children who inhale tobacco smoke are also at health risk and need to be protected.

38. Protect Youth Smoking and Addiction Starts Young
Many young people start smoking early and become addicted during their teens. The older a person is when they start to experiment with tobacco, the less likely they are to become a smoker.
In some developed countries, young girls are even more likely to smoke than boys, which is a big change. Here are some of the prevalence rates for young teenagers from around the Mediterranean.

39. Protect Youth: Smoking and Addiction Starts Young
The picture is much more alarming in some of the lower-income countries, where smoking prevalence among boys and young men is increasing to a dangerously high level. And girls are picking up the habit at younger ages and the gap has been closing between young boys and girls.

40. Key stakeholders Ministry of Finance: Tobacco Tax Revenues
Customs Administration: Smuggling, Border Control
Ministry of Labor: Farmers and Manufacturing Labor
Ministry of Agriculture: Tobacco Production
Ministry of Education: Youth education on tobacco
Smokers: Low prices, variety and appealing products
Producers: Profit, market share, sales
Ministry of Trade: Export earnings from tobacco
Unfortunately until recent years, MOH fought against smoking alone. Many Health Ministries, physicians groups and others active in public health have lobbied for better policies to reduce tobacco use, provided additional public information, and sometimes provided cessation advice and help for smokers who want to quit. But tobacco control cannot be achieved through MOH’s efforts only.
Decades ago, there was considerable debate about whether tobacco use was harmful to health, and the extent of the risks associated with tobacco use. Now thousands of careful scientific studies have established the facts beyond question, and information continues to grow. We have evidence as to what works what does not in reducing tobacco use. But there are many stakeholders, with different concerns that need to be taken into consideration. For example, MOF cares about tobacco tax revenues. For almost as long as tobacco has been commercially sold, it has been taxed and has become an important source of government tax revenue. And tobacco growing provides a livelihood for farmers, and incomes for others who produce, distribute, sell and market tobacco products which are the concerns raised by MOL and MOA when contemplating tobacco control measures. Others benefit from sports and other types of sponsorship from tobacco companies. Its important to consider the concerns and possible contributions of the range of stakeholders when considering tobacco policy.