The Economics of Tobacco: The Market for Cigarettes in Ireland

A recent report from the Revenue Commissioners Research and Analytics Branch examines "The Economics of Tobacco: Modelling the Market for Cigarettes in Ireland" (Padraic Reidy and Keith Walsh; February 2011). Highlights from the executive summary are below.

"Numerous explanatory variables of cigarette consumption are explored but the only factors that are found to be statistically significant in the most efficient econometric regression are: price, income, the introduction of the smoking ban, EU enlargement and the point of sale advertising ban. Of these, the most important effect is from price.

The model suggests a price elasticity of -3.6, i.e., a 1 per cent increase in price results in a 3.6 per cent reduction in cigarette consumption. This price elasticity is extremely high compared to other estimates for the Irish market, most suggest a figure of between 0.5 and 1. A price elasticity of -3.6 is too high to be realistic, for example it would imply that a 10 per cent increase in price reduces smoking by 36 per cent... Therefore another factor must be at play.

...The price elasticity estimated refers to taxed cigarettes: a 1 per cent increase in price leads to a 3.6 decrease in consumption of taxed cigarettes. The most reasonable theory to explain such a large decrease in taxed consumption is that only part of the reduction is caused by lower smoking levels, the remainder must be caused by smokers switching to substitute cigarettes. The most likely substitutes in the case of taxed cigarettes are non-Irish taxed cigarettes...

...Revenue estimates that currently around 20 per cent of cigarettes consumed in Ireland are not Irish taxed and this figure has been increasing in recent years... Further analysis finds some evidence that cigarette tax levels have moved beyond a critical point at which increases in tax rates lead to lower, rather than higher, tax revenue. Further tax (price) rises will reduce smoking somewhat but they will also greatly encourage more untaxed consumption.

Increasing the taxation of cigarettes in Ireland no longer carries the combined benefits of better public health and higher revenue for the public finances... This suggests that taxation increases are no longer the optimum tool for reducing smoking in Ireland. This is further supported by the significance in the model results of the effect of the smoking ban. Such non-price measures are shown to reduce taxed consumption and do not carry the same incentive to switch to untaxed cigarettes as higher rates of taxation."

Diabetes belt in the USA

This graphic image shows the incidence of diabetes in the USA where an estimated 18 million now have the disease. It is based on county level data. In the darkest parts of the map over 11% have been diagnosed as discussed in this Scientific American article. Given the swathe it cuts across the south, it could perhaps be called a "Grits belt".
It would be very interesting to see a similar graph for Ireland. I don't know if that is possible.

Global Public Health Databases

For those interested in some of the pressing public health issues in the developing world, it’s worth highlighting some of the recent work by The Institute for Health Metrics and Evaluation. According to their website the role of the IMHE is to “provide scientific evaluations of health system and health program performance in order to guide health policy and accelerate global health progress.”

They have made available online some very important datasets relating to a number of health indicators, which have much wider coverage than most other sources.

For example, a recent paper in the Lancet documents the progress made in reducing global maternal mortality in childbirth. The authors have compiled a database for 181 countries from 1980 to 2008, using available information from a wide variety of sources including surveys and vital statistics. They estimate there were a total of 342,900 such deaths in 2008, compared to 526,300 in 1980. Despite some progress, 80% of all deaths are concentrated in 21 countries. The bottom five comprises India, Nigeria, Pakistan, Afghanistan, and Ethiopia. An interesting case is Egypt which has seen an annual decrease of 8.4% between 1998 and 2008. In comparison to other developed nations, the US has performed poorly during this period.

Another paper, also published in the Lancet examines trends in the financing of public health expenditure in developing countries, and finds that there are important crowding out effects of development assistance for health.

The same team has done similarly valuable work building a global database for child mortality.

Doctor, doctor! How's business?

Could always be better.

I don't find the Dr., dr., jokes very funny either, but their traditional popularity is difficult to contend with..

Here's the latest one :

What does this policy achieve?

(besides insulting everyone with the slightest intelligence)

The poorest 35% of the population already visit the GP for free in Ireland. The remaining 65% are able to claim tax relief on all their GP expenses.

What is behind this idea? I'm not aware of any evidence to suggest that it might improve health. In fact there is much more evidence to suggest that it will exacerbate problems in health care; for one, it amounts to "over-insurance" which is one of the main drivers of excessive medical inflation. I do expect there to be something more to this plan than the slogan, but at any rate, it seems like more of the unfortunate "here you go, vote for me"style of politics that we know served us poorly in the past. By applying the strategy to healthcare they are totally undermining their political credibility. Why don't they just be honest about it and hand out fifties - it would be cheaper and wouldn't lengthen queues and shorten examination times at the GP's clinic.

One obvious place to start is with the recommendations of the recent Competition Authority Report about GP practices.

Graphs in statistics

Florence Nightingale is best known for her sterling work, as a nurse, improving the health conditions of British soldiers in the Crimea by improving hygiene for example. her contributions to statistics are less well known but important. She developed graphical methods for illustrating public health statistics for UK members of parliament- not the brightest of people in general and was able to use observational studies to show the effect of improved hygiene in field hospitals on mortality. She developed a version of the pie chart.
To remind you of what a good pie chart looks like I have given an example (h/t the Laughing Squid)

Public health video

For a public health video on obesity see "Brave Heart (Mutiny in the Cardiovascular System)"
http://www.youtube.com/watch?v=gI6KhUrKpN0