Social Science & Medicine 138 (2015) 82e90
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Smokeless tobacco use in India: Role of prices and advertising* Deliana Kostova a, *, Dhaval Dave b a b
Centers for Disease Control and Prevention, USA Bentley University & National Bureau of Economic Research, USA
a r t i c l e i n f o
a b s t r a c t
Article history: Available online 23 May 2015
Although the primary form of tobacco use worldwide is cigarette smoking, the large majority of users in India consume smokeless forms of tobacco. There is little evidence on the role of policy-related factors in shaping the demand for smokeless tobacco (ST) in India. This study evaluates the relationship between two such factors, prices and advertising, and ST use in India, using data on 67,737 individuals from the Global Adult Tobacco Survey (GATS) India 2009. We find that ST advertising is more likely to influence ST consumption in women than men, while men are more likely to respond to changes in ST price. We estimate that among adult males in India, the total price elasticity of ST demand is 0.212, which is close to estimates reported for males in the U.S. We do not find strong direct evidence on the economic substitutability or complementarity of smoked and smokeless products. However, the positive association between former smoking and current smokeless use may point to temporal substitutability at the individual level. The findings have implications on the relative effectiveness of policy tools across genders in India e increasing the prices of ST products may discourage ST use particularly among men, and advertising restrictions may play a relatively larger role in the consumption behavior of women in India. Published by Elsevier Ltd.
Keywords: India Smokeless tobacco use Tobacco prices Tobacco advertising Health production
1. Introduction India is the only country in the world where the use of smokeless tobacco (ST) is nearly three times as common as smoking. In a market known for its diversity of tobacco products, smokeless tobacco in India remains by far the most prevalent form used (26%), followed by bidis (a filterless cigarette-like product with 9% prevalence) and cigarettes (6% prevalence). (India Ministry of Health and Family Welfare (2010)) Though there are many forms of smokeless tobacco products in India, they tend to share a level of toxicity that is considerably higher than that of smokeless products in Western markets (Prabhakar et al., 2013; Dhaware et al., 2009). ST use in India is linked to oral and digestive tract cancers, which are the top two causes of cancer mortality among men in India, and to reproductive effects among women (Dikshit et al., 2012; Gupta and Ray, 2003). Recent evidence from survey data further suggests that prevalence of ST use in India is rising among women (Bhawna, 2013), bypassing some of the stigma attached to female smoking. In addition, ST can impose negative externalities on nonusers by inducing spitting in public places and raising the risk of * Disclaimer: The findings and conclusions in this paper are those of the authors and do not necessarily represent the official position of the Centers for Disease Control and Prevention. * Corresponding author. E-mail addresses: [email protected] (D. Kostova), [email protected] (D. Dave).
http://dx.doi.org/10.1016/j.socscimed.2015.05.036 0277-9536/Published by Elsevier Ltd.
communicable diseases such as tuberculosis (HRIDAY, 2012). The large number of users in India (over 300 million), combined with higher product toxicity and potential negative spillover effects, translate into a significant health burden at the population level. Despite these public health concerns, use of smokeless tobacco remains an understudied risk behavior, and few studies examine its economic or policy determinants. Those that do, focus almost exclusively on the United States (Ohsfeldt and Boyle, 1994; Ohsfeldt et al., 1997; Chaloupka et al., 1997; Tauras et al., 2007; Dave and Saffer, 2013). The consensus from US-based evidence is that tobacco taxes reduce ST use; the link between ST use and cigarette smoking is less clear, with some studies suggesting complementarity between the two types of products (Tauras et al., 2007; Dave and Saffer, 2013), and some finding evidence of substitutability (Ohsfeldt and Boyle, 1994; Ohsfeldt et al., 1997; Ault et al., 2004). The role of advertising in ST use has not been directly examined, with the exception of a recent study, which finds that ST use in the United States responds positively to advertising exposure (Dave and Saffer, 2013). Very few studies have analyzed ST use in developing countries, though this is an emerging area of research given the high prevalence and complexities of ST use in low-income nations. Blecher et al. (2014) and Mamudu et al. (2013), for instance, use the Demographic Health Surveys to study patterns of tobacco use in Madagascar. Mamudu et al. (2013) document that the prevalence of
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both smoked as well as smokeless tobacco use in Madagascar is among the highest in Sub-Saharan Africa (SSA). While prevalence of both types of tobacco use is roughly equal among males, among females virtually all tobacco use is in the form of ST, and the prevalence of ST use among females in Madagascar is the highest across SSA. Blecher et al. (2014) further examine socio-economic and demographic determinants of both smoking and ST, and highlight intricacies in patterns of use. Smoking is almost exclusively a male activity, and generally does not vary by socioeconomic status, whereas ST use is highly prevalent among both genders and particularly among low-educated individuals in rural areas. Thus, there appear to be two distinctly different groups of users for smoked versus smokeless tobacco. While research on the determinants of ST demand is relatively sparse in a developing country context, a particularly notable gap exists with respect to the role of prices and advertising, two factors that often form an important underpinning for tobacco control policies. Specifically, no research for adults on the effect of prices and advertising is yet available for India, where over two-thirds of the world's ST users reside. However, a recent study of middleschool-aged students in India indicates a significant price effect on ST use (Joseph and Chaloupka, 2014). Given the magnitude of ST use in India, evidence that is specific to the country is likely to have applied policy relevance, and may inform policy debates in other developing countries with high ST use. We address these research gaps by examining the demand for ST among adults in India and evaluating the role of policy-relevant factors e ST prices, prices of competing smoked products (bidis and cigarettes), and ST advertising. We use individual-level nationally representative data on approximately 68,000 respondents from the India Global Adult Tobacco Survey (GATS) 2009 to estimate models of ST use at both the extensive (any current ST use) and intensive (intensity of ST use among current users) margins,
Table 1 Current rate of smokeless tobacco (ST) use (%), means by selected characteristics (N ¼ 67,737). Overall Age 15e25 26e44 45e64 65þ Gender Female Male Urbanicity Urban Rural Education No formal education/less than primary Completed primary/less than secondary Completed secondary/completed high school Completed college/university or higher Wealth index quintile Lowest Low Middle High Highest Occupation Employed Self-employed Student Homemaker Unemployed/retired ST advertising exposure No recent exposure Recent exposure
24.5 15.8 27.8 29.8 32.6 16.9 31.6 16.7 27.8 31.7 24.1 15.0 11.8 36.5 28.2 22.3 15.4 9.3 31.2 33.9 5.7 16.1 31.6 24.7 23.8
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Table 2 Intensity of smokeless tobacco (ST) use (average number of ST uses per day), means by selected characteristics (N ¼ 15,353). Overall Age 15e25 26e44 45e64 65þ Gender Female Male Urbanicity Urban Rural Education No formal education/less than primary Completed primary/less than secondary Completed secondary/completed high school Completed college/university or higher Wealth index quintile Lowest Low Middle High Highest Occupation Employed Self-employed Student Homemaker Unemployed/retired ST advertising exposure No recent exposure Recent exposure
6.6 6.4 6.7 6.6 6.9 5.7 7.1 6.8 6.6 6.6 6.8 6.5 6.6 6.6 6.4 6.7 7.2 6.6 7.0 7.1 5.6 5.4 6.5 6.4 7.5
Note: Estimates obtained using weights for complex survey design.
and in the process provide the first estimates of how these measures of use among the adult population in India respond to the price of ST and other tobacco products and exposure to ST advertising. We exploit variation in the price of various tobacco products across sampling units within 31 Indian states, allowing us to address potential confounding from unobserved state characteristics. We further construct measures of ST advertising exposure that are plausibly exogenous to the individual ST user's own characteristics, and thus address some of the endogeneity concerns that have challenged the empirical literature on tobacco advertising. Because males and females in India have structurally different patterns of tobacco consumption, we assess heterogeneity in the price and advertising responses across gender. Estimates suggest that ST advertising exposure raises ST demand, particularly among women, while higher ST prices reduce demand, particularly among men. We do not find strong evidence of substitutability or complementarity between smokeless and smoked tobacco products.
2. Data We use data from the Global Adult Tobacco Survey (GATS) India 2009, which collects nationally representative information on tobacco use and factors associated with tobacco use in persons aged 15 and older. The GATS-India is the most comprehensive population survey of tobacco use for the country to date, and is based on standardized and consistent measures of key tobacco indicators, consequently minimizing potential under-reporting and measurement errors (Bhawna, 2013). Ethics approval for the use of these survey data is not required because the data are publicly available. We use data on 67,737 individuals from 31 Indian states covering 2365 primary sampling units (PSUs), and construct two measures
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D. Kostova, D. Dave / Social Science & Medicine 138 (2015) 82e90 Table 3 Means of PSU-level variables (N ¼ 2365). Aggregate exposure to ST advertising among never-tobacco-users over 25 Price per pouch of khaini (rupees) Price per 20 cigarettes (rupees) Price per 20 bidis (rupees)
of ST use. The first captures use at the extensive margin, measured as a binary indicator for whether the respondent currently uses any form of ST. The second captures the intensive margin, which is the frequency of use among current users measured as the number of times per day that the respondent consumes ST. In addition to standard demographic descriptors and detailed measures of all tobacco use, GATS can be used to derive prices respondents have most recently paid for cigarettes, bidis, and ST products. These prices are then averaged at the PSU level to get the locality-specific prices used in the analysis; individual-level prices are not used in order to avoid simultaneity bias. The per-pack prices of cigarettes and bidis are obtained from the ratio of reported expenditures and units purchased, which is straightforward because of the products' uniform unit shape. Deriving prices for smokeless tobacco is more complicated because of differences in packaging across products. GATS respondents indicate the type or types of ST product in their most recent purchase (khaini, gutka, betel quid with tobacco, pan masala, oral snuff, nasal snuff), the amount spent on this purchase, the type of packaging (pouches, cans), and the number of units purchased. Because of inconsistent ST packaging, we calculated the ST price variable by first focusing on a single ST product, then considering only the price reports of survey respondents who purchased a single unit of that product (to avoid interference from volume discounts) and who purchased no other ST products in the same transaction (to avoid misreporting of the product mix). We chose to focus on the ST product khaini, for two reasons. First, khaini is the most commonly used ST product in India
18.0% 2.8 50.6 13.4
(Sinha et al., 2012). Second, it is usually packaged in single-serve pouches, so even if the product weight differs by pouch, the actual consumption unit is fairly uniform. The unit price of khaini, averaged at the PSU level, serves as a representative price for ST products, and provides a consistent single source of variation across geographies from which to derive a price effect. For PSUs that do not have reports of one-pouch khaini purchases, we use khaini prices averaged at the state-urban/rural level. The assumption in using the price of khaini as a representative price for ST products is that the variation within states in the price of other ST products is proportional to the variation in khaini price. If this assumption is violated across states, this will not bias our results since all models include state fixed effects, which will capture any differential variation in the price of khaini relative to the other ST products. Any residual measurement error in the resulting ST price variable would bias the magnitude of the own-price response downward, and hence the estimated impact of ST price on the demand for ST can be interpreted as conservative effects. While national retail-level prices of ST products in India are generally not available in any standardized form for comparison to our price measures, we are able to provide some cross-validation by comparing them to other limited studies. First, our mean unit estimate of 2.8 rupees is close to and within the confidence interval of the average unit prices reported in Singh et al. (2012) for one city in northwest India (Jaipur e a city in Rajasthan) of 1.6e2.6 rupees per unit. Second, Rout and Arora (2014) utilize tax data from the Indian Ministry of Finance, and report an average national price of 0.30
Table 4 Sample characteristics, overall means and means by ST advertising exposure (N ¼ 67,737).
Current ST user Average number of ST uses per day among ST users ST ad exposure Cigarette/bidi ad exposure Former tobacco smoker Age (years) Male Rural Education No formal education/less than primary Completed primary/less than secondary Completed secondary/completed high school Completed college/university or higher Wealth index quintile Lowest Low Middle High Highest Occupation Employed Self-employed Student Homemaker Unemployed/retired *p < .1, **p < .05, ***p < .01. Estimates obtained using weights for complex survey design.
Overall
By ST ad exposure Not exposed
Exposed
0.245 6.6 0.229 0.233 0.029 35.9 0.517 0.707
0.247 6.4 0.000 0.067 0.029 36.8 0.476 0.730
0.238 7.5 1.000 0.796 0.029 32.8 0.656 0.630
0.432 0.289 0.196 0.084
0.476 0.277 0.177 0.070
0.277 0.331 0.262 0.130
*** *** *** ***
0.263 0.200 0.242 0.190 0.104
0.292 0.205 0.240 0.173 0.090
0.162 0.184 0.251 0.250 0.153
*** ***
0.243 0.285 0.112 0.305 0.055
0.233 0.278 0.098 0.333 0.057
0.274 0.309 0.161 0.209 0.046
*** *** *** *** ***
*** *** *** *** ***
*** ***
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rupees per gram of khaini for 2008. Given that khaini pouches generally contain 10 g of product, this implies a unit price per pouch of about 3 rupees, which compares favorably to our mean price of 2.8 rupees. GATS records individual reports of exposure to advertising for ST products within the past month from a wide variety of sources including print media, electronic media, billboards, and stores. We use self-reports of exposure to ST advertising from at least one of these sources to determine the value of the individual-level binary advertising exposure variable used in the baseline demand models. This variable is subsequently utilized to construct the exogenous advertising variable used in the reduced-form demand models, as described in the Methods section. Tables 1 and 2 report means for the two measures of ST use, respectively, across various socio-demographic groups. Overall, about 1 out of 4 Indian adults consumes ST, with the average user consuming 6.6 times daily. These population means mask considerable heterogeneity in prevalence across socio-economic and demographic characteristics. Prevalence among males is almost twice as high as among females (32% vs. 17%), and the average male user also has more frequent daily use (6.7 times vs. 5.2 times). Prevalence of ST use is also significantly higher in rural than urban areas, and tends to decrease monotonically with greater education and wealth. Interestingly, among current users, there are no meaningful differences in the intensity of use by rural/urban residence, wealth, or education. In comparing the unadjusted rates of ST use among persons exposed to ST advertising and those not exposed (Table 1), ST use appears slightly higher among those with no advertising exposure, reflecting the lower socioeconomic composition of the no-ad demographic (Table 4) and underscoring the importance of conditioning ST use on demographic factors when trying to disentangle advertising effects. The intensity of daily use, however, is higher among users with recent ad exposure than those without (Table 2). The mean price per use (pouch) of khaini, predominantly the most common form of ST used in India, is 2.8 rupees (approximately 5e6 US cents based on the 2009 market exchange rate), as noted in Table 3. This compares to 50.6 rupees for a pack of 20 cigarettes, and 13.4 rupees for a pack of 20 bidis.
3. Methods The objective of this study is to estimate the effects of tobacco prices and exposure to ST advertising on ST use, as formulated in the following demand specification:
STijk ¼ b0 þ b1 ADijk þ b2 PSTjk þ b3 PCIGjk þ b4 PBIDIjk þ Xijk F þ STATEk J þ εijk (1) Equation (1) denotes that smokeless tobacco use STijk (measured alternately as current use Prob (STijk > 0) or intensity of use among users STijk j STijk > 0) for the ith adult residing in the jth PSU in state k is a function of advertising exposure (AD), the price of smokeless tobacco (PST) in the respondent's PSU, price of other smoked tobacco products such as cigarettes (PCIG) and bidis (PBIDI) in the respondent's PSU, and a vector of relevant individual socioeconomic characteristics (X) including age, gender, rural vs. urban residence, wealth, education, and occupation. The latter also includes former smoking status as a proxy for unobserved personal traits that may be correlated with both current ST use and advertising exposure (such as having a predisposition to tobacco use, or family influences). Its purpose is twofold: it can reduce omitted variable bias, and can be used to explore the link, and potentially
85
infer substitutability, between past use of smoked tobacco and current use of ST. The parameter ε represents individual error term. For models of current ST use, we estimate Equation (1) as a logit regression, and for models of intensity of ST use conditional on current use, we use ordinary least squares (OLS). Current use and conditional intensity of use are modeled separately in a two-part model in order to distinguish between two distinct behavioral processes, where the primary decision to use ST dominates the secondary decision of how much to use; the two-part model is typically used in cases where there is an overabundance of zero outcomes, as in tobacco use (Madden, 2008; Manning et al., 1987). Sampling weights are used in all models to account for complex survey design. Standard errors are adjusted for arbitrary correlation across individuals residing in the same PSU. Identifying the impact of advertising exposure on ST use presents an empirical challenge due to the potential endogeneity of exposure. Exposure to advertising is not randomly determined: advertising messages are likely to be designed for and distributed to selected target populations, which are likely to have a predetermined above-average propensity to use the advertised product (e.g., beer commercials during sports broadcasts, cosmetics ads in women's magazines). The non-randomness of advertising may be magnified by instances of self-selection into advertising exposure, where people who are more likely to consume a product may also be disproportionately more likely to remember and internalize advertisements for that product, and thus more likely to report exposure. The endogeneity of advertising exposure brought by selected targeting and self-selection can therefore introduce an upward bias into the observed relationship between advertising and consumption. On the other hand, as shown in Table 4, individuals who recall exposure to ST advertising differ across observable socio-economic characteristics (for instance, younger, urban, educated, wealthier, current student status, lower propensity to be unemployed) that are also associated with lower ST use. Thus, there appears to be negative selection on these observable characteristics, which suggests that individuals who are exposed to ST ads may also differ along unobservable characteristics (for instance, a lower rate of time preference or greater risk aversion) that may be negatively associated with ST use (Altonji et al., 2005). Thus, while targeting bias may potentially lead to over-estimates of the advertising response, the direction of the selection bias is a priori indeterminate. Altonji et al. (2005), however, suggest that selection on observable characteristics may provide a good gauge of selection on unobservable characteristics, in which case, at least for the sample under study, the potential negative selection bias may lead to under-estimates of the advertising response. We address the endogeneity of individual ST advertising exposure by introducing a plausibly exogenous measure of advertising, and using it to estimate a reduced-form version of Equation (1). We constructed this variable by aggregating the individual self-reports of ST ad exposure among a strategically restricted subsample of GATS respondents, at the PSU level. This subsample consists of never-tobacco-users e persons who have never consumed any form of tobacco, smoked or smokeless e and who are older than 25. Excluding current or former tobacco users from the construction of this variable in essence introduces plausibly exogenous variation across PSUs by reducing the likelihood that PSUs with more tobacco users and higher ST demand would have disproportionately higher advertising exposure rates due to users' excessive propensity to observe advertising. This likelihood is further reduced by excluding persons under the age of 25, on the presumption that younger individuals may be more likely than older ones to be latent/future tobacco users who may share the ad exposure patterns of current tobacco users. The resulting PSU-level advertising exposure
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Table 5 Baseline models of current ST use, marginal effects. Current ST use, baseline model
Individual ST ad exposure ST price Cigarette price Bidi price Former smoker Age Male Rural Education (relative to no education) Completed primary/less than secondary Completed secondary/completed high school Completed college/university or higher Wealth index quintile (relative to lowest) Low Middle High Highest Occupation (relative to employed) Self-employed Student Homemaker Unemployed/retired N
ST price elasticity Cigarette price elasticity Bidi price elasticity
Overall
Male
Female
0.025*** (0.007) 0.018* (0.010) 0.004 (0.007) 0.001 (0.004) 0.061*** (0.014) 0.002*** (0.000) 0.125*** (0.008) 0.021*** (0.007)
0.026*** (0.009) 0.035** (0.015) 0.006 (0.010) 0.002 (0.006) 0.090*** (0.017) 0.000 (0.000)
0.020** (0.010) 0.006 (0.011) 0.002 (0.009) 0.001 (0.005) 0.040 (0.028) 0.004*** (0.000)
0.028*** (0.007) 0.082*** (0.008) 0.116*** (0.012)
0.003 (0.010) 0.060*** (0.012) 0.100*** (0.017)
0.075*** (0.008) 0.140*** (0.009) 0.179*** (0.008)
0.013 (0.008) 0.026*** (0.009) 0.062*** (0.010) 0.112*** (0.012)
0.019 (0.012) 0.018 (0.013) 0.050*** (0.015) 0.117*** (0.018)
0.009 (0.009) 0.026** (0.011) 0.065*** (0.011) 0.081*** (0.014)
0.010 (0.008) 0.204*** (0.010) 0.074*** (0.010) 0.068*** (0.012) 67,571
0.005 (0.011) 0.286*** (0.012) 0.097*** (0.035) 0.059*** (0.016) 32,931
0.002 (0.013) 0.050** (0.022) 0.035*** (0.011) 0.057*** (0.017) 34,640
0.038*** (0.010)
0.004 (0.009)
All
Male
Female
0.091* 0.018 0.006
0.137** 0.022 0.007
0.040 0.011 0.008
Notes. All models include state fixed effects. Estimates are obtained using weights for complex survey design and reflect clustering of the standard errors at the PSU level. *p < .1, **p < .05, ***p < .01. Standard errors in parentheses.
variable is presumably unrelated to the individual potential user's unmeasured characteristics, and thus plausibly exogenous to individual ST demand. In addition to estimating Equation (1) with individual ST ad exposure, as a baseline for comparison, we also estimate the reduced-form specification of Equation (1), replacing the respondent's own exposure with the PSU-level ad exposure. A related econometric concern arises from unobserved state characteristics that may influence both ST use and the policyrelated factors in the analysis (prices and advertising). For instance, states with more pronounced social norms against tobacco may be more likely to introduce higher tobacco taxes or to pass advertising restrictions. Since such states may also have lower rates of tobacco use, the observed link between tobacco use and prices or advertising would be biased unless differences in social norms are addressed. All models therefore control for state fixed effects, relying only on cross-PSU within-state variation, which account for all unobserved heterogeneity across states. 4. Results Table 4 presents unadjusted mean differences in ST use (along with other observed characteristics) between individuals who are exposed to ST advertising and those who are not. These differences may confound potentially counteracting positive and negative bias from selective targeting of ST ads and selective exposure to ST ads. There is no significant difference in the prevalence of ST use between those who are exposed (23.8%) and those who are not (24.7%), though among ST users, the frequency of daily use is significantly higher for those who are exposed. Respondents who reported being exposed to ST advertising are also younger and more
likely to be male, employed, students, urban residents, and have greater education and wealth e characteristics that are generally associated with lower ST use (Table 1). Measurable socioeconomic differences, therefore, appear to be significant predictors of advertising exposure. The multivariate analyses presented below control for these and other socio-economic factors and inform the extent to which the observed unconditional difference in ST use across advertising exposure is driven by these factors and other unobserved heterogeneity. Table 5 presents estimates of Equation (1) for any current ST use. Across the full sample, individual exposure to ST ads is significantly and positively associated with a higher probability of ST use, on the order of 2.5 percentage points, which is about a 10% increase relative to the mean prevalence. This difference of 2.5 percentage points, conditional on socio-economic factors and state fixed effects, is significantly higher than the unadjusted difference (Table 4). The downward bias in the unadjusted difference is consistent with overall negative selection on observable factors e those who are exposed to ST ads appear to differ along observable characteristics which are associated with a lower propensity to use ST, as noted above with respect to Table 4. Thus, it is likely that further accounting for the endogeneity concerns may reveal stronger responses. Before we turn to the reduced-form estimates, we note that the overall advertising response does mask some heterogeneity across gender. Individual ST ad exposure is associated with a higher absolute increase in the probability of ST use among males (2.6 percentage points) relative to females (2 percentage points), though these translate into a higher relative increase for females (11.8% vs. 8.2% in comparison to the mean prevalence rates).
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Table 6 Reduced form models of current ST use, marginal effects. Current ST use, reduced form model
Aggregate ST ad exposure (exogenous measure) ST price Cigarette price Bidi price Former smoker Age Male Rural Education (relative to no education) Completed primary/less than secondary Completed secondary/completed high school Completed college/university or higher Wealth index quintile (relative to lowest) Low Middle High Highest Occupation (relative to employed) Self-employed Student Homemaker Unemployed/retired N
ST price elasticity Cigarette price elasticity Bidi price elasticity
Overall
Male
Female
0.018 (0.027) 0.018* (0.010) 0.004 (0.007) 0.001 (0.004) 0.062*** (0.014) 0.002*** (0.000) 0.127*** (0.008) 0.022*** (0.008)
0.026 (0.037) 0.035** (0.015) 0.006 (0.010) 0.003 (0.006) 0.091*** (0.017) 0.000 (0.000)
0.074*** (0.027) 0.005 (0.011) 0.002 (0.009) 0.001 (0.005) 0.041 (0.028) 0.004*** (0.000)
0.026*** (0.007) 0.081*** (0.008) 0.115*** (0.012)
0.004 (0.010) 0.059*** (0.012) 0.098*** (0.017)
0.073*** (0.008) 0.140*** (0.009) 0.179*** (0.008)
0.012 (0.008) 0.023** (0.009) 0.060*** (0.010) 0.109*** (0.012)
0.017 (0.012) 0.014 (0.013) 0.045*** (0.015) 0.111*** (0.018)
0.009 (0.009) 0.025** (0.011) 0.066*** (0.011) 0.082*** (0.014)
0.010 (0.008) 0.204*** (0.010) 0.074*** (0.010) 0.069*** (0.012) 67,737
0.004 (0.011) 0.285*** (0.012) 0.089** (0.035) 0.060*** (0.016) 32,994
0.003 (0.013) 0.050** (0.022) 0.036*** (0.011) 0.058*** (0.017) 34,743
All
Male
Female
0.090* 0.019 0.007
0.136** 0.022 0.010
0.038 0.011 0.007
0.036*** (0.011)
0.009 (0.009)
Notes. All models include state fixed effects. Estimates are obtained using weights for complex survey design and reflect clustering of the standard errors at the PSU level. *p < .1, **p < .05, ***p < .01. Standard errors in parentheses.
Higher ST prices are also significantly negatively associated with ST use, with an estimated elasticity of 0.09. Virtually all of this response, however, is driven by males; the own-price elasticity among males is estimated at 0.14. Though we include the prices of cigarettes and bidis to explore the role of these products as substitutes or complements to ST, we do not find any significant effects of these other tobacco prices on current ST use. The effects of other covariates are generally consistent with the tobacco literature (see for instance, Dave and Saffer, 2013) and follow patterns of use reflected across socio-economic characteristics (shown in Table 1). Males have a higher likelihood or using ST, and prevalence is particularly higher among males residing in rural areas. There is a strong education gradient, and ST consumption also monotonically declines with higher educational attainment. Prior studies have shown that educated individuals are more allocatively efficient in health production, and are therefore less likely to engage in risky behaviors such as tobacco and other substance use (Grossman and Kaestner, 1997). The likelihood of using ST is also lower among those who are unemployed or out of the labor force (students, retirees, homemakers) relative to those who are employed. Based on estimates for the various wealth quintiles, ST use has a negative wealth elasticity consistent with tobacco consumption generally constituting an inferior good. However, with respect to the intensity of ST use among current users (Tables 7 and 8), we generally find the opposite. Once an individual has decided to consume ST, their intensity of use generally rises with wealth. Having a history of smoking is positively and significantly correlated with ST demand. This effect may be an expression of unobserved propensity to use any form of tobacco that tobacco users may share. On the other hand, it may also be an indication of temporal substitutability between smoked and smokeless tobacco
e if those who currently use ST are more likely to be former smokers, then ST may have served as a path towards smoking cessation. Given that the advertising effects, based on individual ST ad exposure, may be biased due to the endogeneity concerns noted above, Table 6 presents the reduced-form effects of the aggregated ad exposure measure that is plausibly exogenous to the respondent's ST demand. These estimates suggest that advertising exposure is not significantly associated with current ST use among males. Among females, however, the advertising effect is sizeable and statistically significant at 0.074, suggesting that ST advertising exposure would raise the propensity to use ST by 7.4 percentage points. The higher advertising response among females may reflect their significantly greater relative prevalence of ST use; the vast majority (85%) of female tobacco users consume ST, compared with 49% of male tobacco users. Thus, given that most females who are at-risk of using tobacco (current or potential users) end up consuming ST, possibly due to the higher stigma associated with smoked tobacco, they are likely more sensitive to ST advertising. Estimates of the own-price elasticity, and the effects of the other measured factors, remain robust. Tables 7 and 8 present corresponding models, based on individual ST ad exposure and aggregate ST ad exposure respectively, for the intensity of ST use among current users. Estimates (Table 7) suggest that the individual-specific measure of exposure to any ST advertising is positively and significantly associated with the intensity of use. Overall, exposure is associated with an increase in ST use by about one time per day, which translates to a 16% increase relative to the mean. The advertising response is significantly stronger among females (an increase of daily frequency of use of 2.27 times) than males (0.63 times). The reduced-form estimates
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Table 7 Baseline models of ST use intensity among users. Average number of ST uses per day, baseline model
Individual ST ad exposure ST price Cigarette price Bidi price Former smoker Age Male Rural Education (relative to no education) Completed primary/less than secondary Completed secondary/completed high school Completed college/university or higher Wealth index quintile (relative to lowest) Low Middle High Highest Occupation (relative to employed) Self-employed Student Homemaker Unemployed/retired N
ST price elasticity Cigarette price elasticity Bidi price elasticity
Overall
Male
Female
0.990*** (0.224) 0.438* (0.247) 0.219 (0.234) 0.089 (0.095) 0.859** (0.344) 0.011** (0.005) 1.280*** (0.265) 0.181 (0.196)
0.626*** (0.224) 0.559* (0.302) 0.338 (0.310) 0.014 (0.119) 0.945** (0.368) 0.013** (0.006)
2.273*** (0.515) 0.384 (0.360) 0.004 (0.251) 0.173 (0.127) 1.257 (0.768) 0.034*** (0.008)
0.579*** (0.197) 1.078*** (0.257) 1.247*** (0.357)
0.426* (0.248) 1.132*** (0.287) 1.285*** (0.381)
0.135 (0.220) 0.106 (0.221) 0.637** (0.294) 0.148 (0.323)
0.140 (0.292) 0.363 (0.294) 0.805** (0.370) 0.316 (0.411)
0.150 (0.215) 0.991 (0.626) 1.010*** (0.289) 0.794*** (0.273) 15,307
0.159 (0.227) 0.392 (0.816) 0.210 (0.908) 0.501* (0.299) 9459
0.957** (0.411) 1.212*** (0.442) 1.315*** (0.358) 1.626*** (0.509) 5848
All
Male
Female
0.069* 0.035 0.014
0.081* 0.049 0.002
0.095 0.001 0.043
0.367 (0.253)
0.076 (0.276) 0.660** (0.262) 0.903** (0.393) 1.502 (0.949) 0.113 0.087 0.633 0.152
(0.291) (0.283) (0.479) (0.477)
Notes. All models include state fixed effects. Estimates are obtained using weights for complex survey design and reflect clustering of the standard errors at the PSU level. *p < .1, **p < .05, ***p < .01. Standard errors in parentheses.
(Table 8) suggest a similar pattern. Accounting for the endogeneity of the individual's own-recalled ST ad exposure, the reduced-form models indicate that advertising exposure (based on the aggregate exogenous measure) raises daily frequency of use by 1.7 times for the overall sample (approximately 27% increase relative to the mean). The effect magnitude is larger among females (2.5 times) than males (1.3 times), though the effect for males is not statistically significant. Higher ST prices are also found to reduce ST use at the intensive margin, though we cannot reject the hypothesis that this price response is the same for both males (elasticity of 0.076) and females (0.085) (Table 8). Combining both of the price responses at the intensive margin with those at the extensive margin (Table 6), we can derive the total own-price elasticity of ST use: 0.21 for males, and 0.12 for females. These compare with own-price elasticity estimates of 0.35 for cigarettes and 0.91 for bidis in India (John et al., 2010), and own-price elasticity estimates of 0.3 to 0.6 for cigarettes and smokeless tobacco in the U.S. (Dave and Saffer, 2013). While the cross-price elasticity estimates for cigarettes and bidis are imprecise and not statistically significant, and thus should be interpreted with caution, there is some suggestive evidence of economic complementarity at the intensive margin, at least contemporaneously and cross-sectionally, higher cigarette prices may weakly reduce the intensity of ST use among current users. The cross-price elasticity (with respect to cigarettes) is somewhat larger in magnitude for males (0.05 vs. 0.02); this may reflect the higher prevalence of dual-users among males, wherein about 19% of male tobacco users consume both smokeless and smoked forms, compared to only 5% of female tobacco users (Bhawna, 2013).
5. Discussion Evidence on how policy-relevant factors such as prices and advertising exposure impact smokeless tobacco use is quite limited, and most of this research is based on the U.S. where the smokelessvs-smoked pattern of tobacco use is generally reversed compared to India. The limited research on the demand for ST products may not generalize to populations in developing countries such as India. This study provides the first estimates of the extent to which ST use among the adult population in India responds to prices and advertising exposure, based on recent nationally representative data from GATS India 2009. We find that ST advertising is more likely to influence women with respect to both prevalence and intensity of ST use, while men are more likely to respond to changes in ST price. We estimate that among adult males in India, the total price elasticity of ST demand is 0.212, which is nearly identical to one of the estimates reported for adolescent males in the US (0.20, Tauras et al., 2007, 0.59, Chaloupka et al., 1997), and close to the estimate reported for adults in the US (0.15, Ohsfeldt et al., 1997). It is lower than the estimate reported for middle-school-aged youths in India (0.59, Joseph and Chaloupka, 2014), which is consistent with the expectation that price sensitivity decreases with aging as income constraints relax. We do not find strong direct evidence on the economic substitutability or complementarity of smoked and ST products. However, the positive association between former smoking and current ST use may point to temporal substitutability at the individual level; if former smokers are more likely to currently use ST, product switching may be likely. This is consistent with evidence from the U.S. (Dave and Saffer, 2013), which is suggestive of some smokers
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Table 8 Reduced form models of ST use intensity among users. Average number of ST uses per day, reduced form model
Aggregate ST ad exposure (exogenous measure) ST price Cigarette price Bidi price Former smoker Age Male Rural Education (relative to no education) Completed primary/less than secondary Completed secondary/completed high school Completed college/university or higher Wealth index quintile (relative to lowest) Low Middle High Highest Occupation (relative to employed) Self-employed Student Homemaker Unemployed/retired N
ST price elasticity Cigarette price elasticity Bidi price elasticity
Overall
Male
Female
1.707** (0.859) 0.397 (0.242) 0.235 (0.229) 0.100 (0.095) 0.863** (0.347) 0.009* (0.005) 1.338*** (0.265) 0.108 (0.199)
1.275 (1.095) 0.522* (0.294) 0.348 (0.305) 0.035 (0.119) 0.947** (0.369) 0.014** (0.006)
2.487** (1.005) 0.365 (0.367) 0.080 (0.248) 0.161 (0.133) 1.358* (0.758) 0.030*** (0.008)
0.504*** (0.194) 0.982*** (0.256) 1.107*** (0.355)
0.364 (0.245) 1.052*** (0.286) 1.177*** (0.379)
0.576** (0.259) 0.767* (0.399) 1.308 (0.985)
0.130 (0.220) 0.141 (0.220) 0.680** (0.292) 0.174 (0.324)
0.155 (0.294) 0.355 (0.295) 0.807** (0.368) 0.303 (0.414)
0.139 (0.300) 0.216 (0.280) 0.788* (0.475) 0.253 (0.491)
0.144 (0.214) 1.052* (0.626) 1.029*** (0.290) 0.802*** (0.274) 15,353
0.159 (0.226) 0.431 (0.811) 0.092 (0.860) 0.511* (0.299) 9484
0.969** (0.412) 1.353*** (0.448) 1.349*** (0.376) 1.609*** (0.516) 5869
All
Male
Female
0.063 0.037 0.016
0.076* 0.051 0.005
0.085 0.019 0.037
0.318 (0.259)
0.232 (0.278)
Notes. All models include state fixed effects. Estimates are obtained using weights for complex survey design and reflect clustering of the standard errors at the PSU level. *p < .1, **p < .05, ***p < .01. Standard errors in parentheses.
potentially using ST as a pathway towards reducing or quitting smoking. We find some weak evidence, especially for males, that contemporaneously cigarettes and ST may be economic complements, which is consistent with a high prevalence of dual concurrent use of both smoked and smokeless tobacco among Indian males. The estimates from this study suggest that cost-based policies such as higher excise or ad valorem taxes may be more effective in reducing ST use among adult males relative to females. It is somewhat surprising that in adulthood, females in India are found to be less price-sensitive than males in their ST use. Studies from developing countries that compare tobacco use by gender tend to find that women's tobacco use is generally more responsive to prices. In the only prior study that is specific to India, girls have been found to be more price-sensitive than boys in consuming both smoked and ST products, and boys do not show a significant response to ST prices (Joseph and Chaloupka, 2014). It is conceivable that as women age, their response to incentives changes in a different way than it does for men. In the case of India, ST prices appear to lose impact for women during adulthood, when advertising emerges as a stronger factor; the opposite happens in adult men who tend to be less influenced by advertising exposure but appear responsive to prices. As noted earlier, about 85% of females in India who use tobacco do so in the form of ST; if this high relative rate of ST use also coincides with a greater addictive ST stock, then recent research based on neuroeconomics indeed suggests that such individuals would be more responsive to advertising but less responsive to price (Saffer et al., 2015). When it comes to advertising, one policy option is to ban advertising. Since 2009, 17 of 31 states in India have implemented bans on the sale of a common type of ST, gutka, and 16 states
increased the VAT tax level for ST between 2010 and 2013. More recently, Assam became the first state to ban the sale, consumption, and advertising of all forms of smokeless tobacco. A relatively large body of research exists on the link between advertising policy instruments and cigarette smoking; even so, the evidence is often divided: comprehensive literature reviews in Blecher (2008) and Saffer and Chaloupka (2000) point to a nearly equal split between the number of studies finding positive advertising effects and weak advertising effects, with potential differences in the effects depending on the intensity of the advertising policy instrument (Saffer and Chaloupka, 2000) and methodological issues (Dave and Kelly, 2014). Our findings add to this literature in the context of ST, and suggest that a complete advertising ban of ST products in India could reduce ST use from about 16% to 9% among females, and reduce the intensity of daily use among females, conditional on ST use, from about 5 times to 2.5 times. While we do not find significant advertising responses among males, the effect magnitudes suggest that there may be a small decline in the intensity of use among current male users if advertising is restricted. If ST and smoked tobacco are intertemporal substitutes, as weakly suggested in this study as well as some prior U.S.-based research, then policymakers may need to complement ST bans with anti-smoking policies and monitor smoking rates in order to minimize concerns of substitution from ST to smoked tobacco over time. Wealth appears to provide opposing incentives in the decision to use ST versus how much to use. We find that ST use is inversely related to wealth, suggesting that the decision to use ST can be characterized as an inferior good. In contrast, for people who have already chosen to consume smokeless tobacco, ST appears to be a normal good, as wealth is positively related to their consumption intensity. This difference has policy implications in so far as shifts in
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the SES distribution of the India population may have an augmenting or mitigating effect on the effects of concurrent policy changes. References Altonji, J.G., Elder, T.E., Taber, C., 2005. Selection on observable and unobservable variables: assessing the effectiveness of catholic schools. J. Political Econ. 113 (1), 151e184. Ault, R.W., Ekelund, R.B., Jackson, J.D., Saba, R.P., 2004. Smokeless tobacco, smoking cessation and harm reduction: an economic analysis. Appl. Econ. 36, 17e29. Bhawna, G., 2013. Burden of smoked and smokeless tobacco consumption in India e results from the global adult tobacco survey India (GATS-India) e 2009e2010. Asian Pac. J. Cancer Prev. 14, 3323e3329. Blecher, E., 2008. The impact of tobacco advertising bans on consumption in developing countries. J. Health Econ. 27 (4), 930e942. Blecher, E., Liber, A.C., Chaussard, M., Fedewa, S., 2014. Market structures, socioeconomics, and tobacco usage patterns in Madagascar. Nicotine Tob. Res. 16 (Suppl. 1), S56eS64. Chaloupka, F.J., Tauras, J.A., Grossman, M., 1997. Public policy and youth smokeless tobacco use. South. Econ. J. 64, 503e516. Dave, D.M., Saffer, H., 2013. Demand for smokeless tobacco: role of magazine advertising. J. Health Econ. 32, 682e697. Dave, D., Kelly, I., 2014. Advertising as a determinant of health in the USA. In: Culyer, A. (Ed.), Encyclopedia of Health Economics. Elsevier, Inc, Amsterdam, pp. 32e50. Dhaware, D., Deshpande, A., Khandekar, R.N., Chowgule, R., 2009. Determination of toxic metals in Indian smokeless tobacco products. Sci. World J. 9, 1140e1147. Dikshit, R., Gupta, P.C., Ramasundarahettige, C., Gajalakshmi, V., Aleksandrowicz, L., Badwe, R., Kumar, R., Roy, S., Suraweera, W., Bray, F., Mallath, M., Singh, P.K., Sinha, D.N., Shet, A.S., Gelband, H., Jha, P., 2012. Cancer mortality in India: a nationally representative survey. Lancet 379 (9828), 1807e1816. Grossman, M., Kaestner, R., 1997. Effects of education on health. In: Behrman, J.R., Stacey, N. (Eds.), The Social Benefits of Education. University of Michigan Press, Ann Arbor, MI, pp. 69e123. Gupta, P.G., Ray, C.S., 2003. Smokeless tobacco and health in India and South Asia. Respirology 8, 419e431. Health Related Information Dissemination Amongst Youth (HRIDAY), 2012. Tobacco
Control Laws and Initiatives in India: Issue Based Fact Sheets. HRIDAY, New Delhi, India. India Ministry of Health and Family Welfare, 2010. Global Adult Tobacco Survey India 2009-2010. Available at. : www.who.int/tobacco/surveillance/gats_india/ en. John, R.M., Rao, R.K., Rao, M.G., Moore, J., et al., 2010. The Economics of Tobacco and Tobacco Taxation in India. International Union Against Tuberculosis and Lung Disease (The Union). Joseph, R.A., Chaloupka, F.J., 2014. The influence of prices on youth tobacco use in India. Nicotine Tob. Res. 16 (Suppl. 1), S24eS29. Madden, D., 2008. Sample selection versus two-part models revisited: the case of female smoking and drinking. J. Health Econ. 27 (2), 300e307. Mamudu, H.M., John, R.M., Veeranki, S.P., Ogwell Ouma, A.E., 2013. The odd man out in sub-Saharan Africa: understanding the tobacco use prevalence in Madagascar. BMC Public Health 13, 856. Manning, W.G., Duan, N., Rogers, W.H., 1987. Monte Carlo evidence on the choice between sample selection and two-part models. J. of Econometrics 35 (1), 59e82. Ohsfeldt, R.L., Boyle, R.G., 1994. Tobacco excise taxes and rates of smokeless tobacco products in the US: an explanatory ecological analysis. Tob. Control 3, 316e323. Ohsfeldt, R.L., Boyle, R.G., Capilouto, E., 1997. Effects of tobacco excise taxes on the use of smokeless tobacco products in the United States. Health Econ. 6, 525e531. Prabhakar, V., Jayakrishnan, G., Nair, S.V., Ranganathan, B., 2013. Determination of trace metals, moisture, pH and assessment of potential toxicity of selected smokeless tobacco products. Indian J. Pharmacol. Sci. 75 (3), 262e269. Rout, S.K., Arora, M., 2014. Taxation of smokeless tobacco in India. Tob. Control 51 (Suppl. 1), s8es12. Saffer, H., Chaloupka, F.J., 2000. The effect of tobacco advertising bans on tobacco consumption. J. Health Econ. 19 (6), 1117e1137. Saffer, H., Dave, D., Grossman, M., 2015. A behavioral economic model of alcohol advertising and price. Health Econ. (in press). Singh, V., Sharma, B.S., Saxena, P., Meena, H., Mangal, D.K., 2012. Price and consumption of tobacco. Lung India 29 (3), 212e216. Sinha, D.N., Gupta, P.C., Cecily, R., Singh, P.K., 2012. Prevalence of smokeless tobacco use among adults in who South-East Asia. Indian J. Cancer 49 (4), 342e346. Tauras, J., Powell, L., Chaloupka, F.J., Ross, H., 2007. The demand for smokeless tobacco among male high school students in the United States: the impact of taxes, prices and policies. Appl. Econ. 39, 31e41.
Contents lists available at ScienceDirect
Social Science & Medicine journal homepage: www.elsevier.com/locate/socscimed
Smokeless tobacco use in India: Role of prices and advertising* Deliana Kostova a, *, Dhaval Dave b a b
Centers for Disease Control and Prevention, USA Bentley University & National Bureau of Economic Research, USA
a r t i c l e i n f o
a b s t r a c t
Article history: Available online 23 May 2015
Although the primary form of tobacco use worldwide is cigarette smoking, the large majority of users in India consume smokeless forms of tobacco. There is little evidence on the role of policy-related factors in shaping the demand for smokeless tobacco (ST) in India. This study evaluates the relationship between two such factors, prices and advertising, and ST use in India, using data on 67,737 individuals from the Global Adult Tobacco Survey (GATS) India 2009. We find that ST advertising is more likely to influence ST consumption in women than men, while men are more likely to respond to changes in ST price. We estimate that among adult males in India, the total price elasticity of ST demand is 0.212, which is close to estimates reported for males in the U.S. We do not find strong direct evidence on the economic substitutability or complementarity of smoked and smokeless products. However, the positive association between former smoking and current smokeless use may point to temporal substitutability at the individual level. The findings have implications on the relative effectiveness of policy tools across genders in India e increasing the prices of ST products may discourage ST use particularly among men, and advertising restrictions may play a relatively larger role in the consumption behavior of women in India. Published by Elsevier Ltd.
Keywords: India Smokeless tobacco use Tobacco prices Tobacco advertising Health production
1. Introduction India is the only country in the world where the use of smokeless tobacco (ST) is nearly three times as common as smoking. In a market known for its diversity of tobacco products, smokeless tobacco in India remains by far the most prevalent form used (26%), followed by bidis (a filterless cigarette-like product with 9% prevalence) and cigarettes (6% prevalence). (India Ministry of Health and Family Welfare (2010)) Though there are many forms of smokeless tobacco products in India, they tend to share a level of toxicity that is considerably higher than that of smokeless products in Western markets (Prabhakar et al., 2013; Dhaware et al., 2009). ST use in India is linked to oral and digestive tract cancers, which are the top two causes of cancer mortality among men in India, and to reproductive effects among women (Dikshit et al., 2012; Gupta and Ray, 2003). Recent evidence from survey data further suggests that prevalence of ST use in India is rising among women (Bhawna, 2013), bypassing some of the stigma attached to female smoking. In addition, ST can impose negative externalities on nonusers by inducing spitting in public places and raising the risk of * Disclaimer: The findings and conclusions in this paper are those of the authors and do not necessarily represent the official position of the Centers for Disease Control and Prevention. * Corresponding author. E-mail addresses: [email protected] (D. Kostova), [email protected] (D. Dave).
http://dx.doi.org/10.1016/j.socscimed.2015.05.036 0277-9536/Published by Elsevier Ltd.
communicable diseases such as tuberculosis (HRIDAY, 2012). The large number of users in India (over 300 million), combined with higher product toxicity and potential negative spillover effects, translate into a significant health burden at the population level. Despite these public health concerns, use of smokeless tobacco remains an understudied risk behavior, and few studies examine its economic or policy determinants. Those that do, focus almost exclusively on the United States (Ohsfeldt and Boyle, 1994; Ohsfeldt et al., 1997; Chaloupka et al., 1997; Tauras et al., 2007; Dave and Saffer, 2013). The consensus from US-based evidence is that tobacco taxes reduce ST use; the link between ST use and cigarette smoking is less clear, with some studies suggesting complementarity between the two types of products (Tauras et al., 2007; Dave and Saffer, 2013), and some finding evidence of substitutability (Ohsfeldt and Boyle, 1994; Ohsfeldt et al., 1997; Ault et al., 2004). The role of advertising in ST use has not been directly examined, with the exception of a recent study, which finds that ST use in the United States responds positively to advertising exposure (Dave and Saffer, 2013). Very few studies have analyzed ST use in developing countries, though this is an emerging area of research given the high prevalence and complexities of ST use in low-income nations. Blecher et al. (2014) and Mamudu et al. (2013), for instance, use the Demographic Health Surveys to study patterns of tobacco use in Madagascar. Mamudu et al. (2013) document that the prevalence of
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both smoked as well as smokeless tobacco use in Madagascar is among the highest in Sub-Saharan Africa (SSA). While prevalence of both types of tobacco use is roughly equal among males, among females virtually all tobacco use is in the form of ST, and the prevalence of ST use among females in Madagascar is the highest across SSA. Blecher et al. (2014) further examine socio-economic and demographic determinants of both smoking and ST, and highlight intricacies in patterns of use. Smoking is almost exclusively a male activity, and generally does not vary by socioeconomic status, whereas ST use is highly prevalent among both genders and particularly among low-educated individuals in rural areas. Thus, there appear to be two distinctly different groups of users for smoked versus smokeless tobacco. While research on the determinants of ST demand is relatively sparse in a developing country context, a particularly notable gap exists with respect to the role of prices and advertising, two factors that often form an important underpinning for tobacco control policies. Specifically, no research for adults on the effect of prices and advertising is yet available for India, where over two-thirds of the world's ST users reside. However, a recent study of middleschool-aged students in India indicates a significant price effect on ST use (Joseph and Chaloupka, 2014). Given the magnitude of ST use in India, evidence that is specific to the country is likely to have applied policy relevance, and may inform policy debates in other developing countries with high ST use. We address these research gaps by examining the demand for ST among adults in India and evaluating the role of policy-relevant factors e ST prices, prices of competing smoked products (bidis and cigarettes), and ST advertising. We use individual-level nationally representative data on approximately 68,000 respondents from the India Global Adult Tobacco Survey (GATS) 2009 to estimate models of ST use at both the extensive (any current ST use) and intensive (intensity of ST use among current users) margins,
Table 1 Current rate of smokeless tobacco (ST) use (%), means by selected characteristics (N ¼ 67,737). Overall Age 15e25 26e44 45e64 65þ Gender Female Male Urbanicity Urban Rural Education No formal education/less than primary Completed primary/less than secondary Completed secondary/completed high school Completed college/university or higher Wealth index quintile Lowest Low Middle High Highest Occupation Employed Self-employed Student Homemaker Unemployed/retired ST advertising exposure No recent exposure Recent exposure
24.5 15.8 27.8 29.8 32.6 16.9 31.6 16.7 27.8 31.7 24.1 15.0 11.8 36.5 28.2 22.3 15.4 9.3 31.2 33.9 5.7 16.1 31.6 24.7 23.8
83
Table 2 Intensity of smokeless tobacco (ST) use (average number of ST uses per day), means by selected characteristics (N ¼ 15,353). Overall Age 15e25 26e44 45e64 65þ Gender Female Male Urbanicity Urban Rural Education No formal education/less than primary Completed primary/less than secondary Completed secondary/completed high school Completed college/university or higher Wealth index quintile Lowest Low Middle High Highest Occupation Employed Self-employed Student Homemaker Unemployed/retired ST advertising exposure No recent exposure Recent exposure
6.6 6.4 6.7 6.6 6.9 5.7 7.1 6.8 6.6 6.6 6.8 6.5 6.6 6.6 6.4 6.7 7.2 6.6 7.0 7.1 5.6 5.4 6.5 6.4 7.5
Note: Estimates obtained using weights for complex survey design.
and in the process provide the first estimates of how these measures of use among the adult population in India respond to the price of ST and other tobacco products and exposure to ST advertising. We exploit variation in the price of various tobacco products across sampling units within 31 Indian states, allowing us to address potential confounding from unobserved state characteristics. We further construct measures of ST advertising exposure that are plausibly exogenous to the individual ST user's own characteristics, and thus address some of the endogeneity concerns that have challenged the empirical literature on tobacco advertising. Because males and females in India have structurally different patterns of tobacco consumption, we assess heterogeneity in the price and advertising responses across gender. Estimates suggest that ST advertising exposure raises ST demand, particularly among women, while higher ST prices reduce demand, particularly among men. We do not find strong evidence of substitutability or complementarity between smokeless and smoked tobacco products.
2. Data We use data from the Global Adult Tobacco Survey (GATS) India 2009, which collects nationally representative information on tobacco use and factors associated with tobacco use in persons aged 15 and older. The GATS-India is the most comprehensive population survey of tobacco use for the country to date, and is based on standardized and consistent measures of key tobacco indicators, consequently minimizing potential under-reporting and measurement errors (Bhawna, 2013). Ethics approval for the use of these survey data is not required because the data are publicly available. We use data on 67,737 individuals from 31 Indian states covering 2365 primary sampling units (PSUs), and construct two measures
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D. Kostova, D. Dave / Social Science & Medicine 138 (2015) 82e90 Table 3 Means of PSU-level variables (N ¼ 2365). Aggregate exposure to ST advertising among never-tobacco-users over 25 Price per pouch of khaini (rupees) Price per 20 cigarettes (rupees) Price per 20 bidis (rupees)
of ST use. The first captures use at the extensive margin, measured as a binary indicator for whether the respondent currently uses any form of ST. The second captures the intensive margin, which is the frequency of use among current users measured as the number of times per day that the respondent consumes ST. In addition to standard demographic descriptors and detailed measures of all tobacco use, GATS can be used to derive prices respondents have most recently paid for cigarettes, bidis, and ST products. These prices are then averaged at the PSU level to get the locality-specific prices used in the analysis; individual-level prices are not used in order to avoid simultaneity bias. The per-pack prices of cigarettes and bidis are obtained from the ratio of reported expenditures and units purchased, which is straightforward because of the products' uniform unit shape. Deriving prices for smokeless tobacco is more complicated because of differences in packaging across products. GATS respondents indicate the type or types of ST product in their most recent purchase (khaini, gutka, betel quid with tobacco, pan masala, oral snuff, nasal snuff), the amount spent on this purchase, the type of packaging (pouches, cans), and the number of units purchased. Because of inconsistent ST packaging, we calculated the ST price variable by first focusing on a single ST product, then considering only the price reports of survey respondents who purchased a single unit of that product (to avoid interference from volume discounts) and who purchased no other ST products in the same transaction (to avoid misreporting of the product mix). We chose to focus on the ST product khaini, for two reasons. First, khaini is the most commonly used ST product in India
18.0% 2.8 50.6 13.4
(Sinha et al., 2012). Second, it is usually packaged in single-serve pouches, so even if the product weight differs by pouch, the actual consumption unit is fairly uniform. The unit price of khaini, averaged at the PSU level, serves as a representative price for ST products, and provides a consistent single source of variation across geographies from which to derive a price effect. For PSUs that do not have reports of one-pouch khaini purchases, we use khaini prices averaged at the state-urban/rural level. The assumption in using the price of khaini as a representative price for ST products is that the variation within states in the price of other ST products is proportional to the variation in khaini price. If this assumption is violated across states, this will not bias our results since all models include state fixed effects, which will capture any differential variation in the price of khaini relative to the other ST products. Any residual measurement error in the resulting ST price variable would bias the magnitude of the own-price response downward, and hence the estimated impact of ST price on the demand for ST can be interpreted as conservative effects. While national retail-level prices of ST products in India are generally not available in any standardized form for comparison to our price measures, we are able to provide some cross-validation by comparing them to other limited studies. First, our mean unit estimate of 2.8 rupees is close to and within the confidence interval of the average unit prices reported in Singh et al. (2012) for one city in northwest India (Jaipur e a city in Rajasthan) of 1.6e2.6 rupees per unit. Second, Rout and Arora (2014) utilize tax data from the Indian Ministry of Finance, and report an average national price of 0.30
Table 4 Sample characteristics, overall means and means by ST advertising exposure (N ¼ 67,737).
Current ST user Average number of ST uses per day among ST users ST ad exposure Cigarette/bidi ad exposure Former tobacco smoker Age (years) Male Rural Education No formal education/less than primary Completed primary/less than secondary Completed secondary/completed high school Completed college/university or higher Wealth index quintile Lowest Low Middle High Highest Occupation Employed Self-employed Student Homemaker Unemployed/retired *p < .1, **p < .05, ***p < .01. Estimates obtained using weights for complex survey design.
Overall
By ST ad exposure Not exposed
Exposed
0.245 6.6 0.229 0.233 0.029 35.9 0.517 0.707
0.247 6.4 0.000 0.067 0.029 36.8 0.476 0.730
0.238 7.5 1.000 0.796 0.029 32.8 0.656 0.630
0.432 0.289 0.196 0.084
0.476 0.277 0.177 0.070
0.277 0.331 0.262 0.130
*** *** *** ***
0.263 0.200 0.242 0.190 0.104
0.292 0.205 0.240 0.173 0.090
0.162 0.184 0.251 0.250 0.153
*** ***
0.243 0.285 0.112 0.305 0.055
0.233 0.278 0.098 0.333 0.057
0.274 0.309 0.161 0.209 0.046
*** *** *** *** ***
*** *** *** *** ***
*** ***
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rupees per gram of khaini for 2008. Given that khaini pouches generally contain 10 g of product, this implies a unit price per pouch of about 3 rupees, which compares favorably to our mean price of 2.8 rupees. GATS records individual reports of exposure to advertising for ST products within the past month from a wide variety of sources including print media, electronic media, billboards, and stores. We use self-reports of exposure to ST advertising from at least one of these sources to determine the value of the individual-level binary advertising exposure variable used in the baseline demand models. This variable is subsequently utilized to construct the exogenous advertising variable used in the reduced-form demand models, as described in the Methods section. Tables 1 and 2 report means for the two measures of ST use, respectively, across various socio-demographic groups. Overall, about 1 out of 4 Indian adults consumes ST, with the average user consuming 6.6 times daily. These population means mask considerable heterogeneity in prevalence across socio-economic and demographic characteristics. Prevalence among males is almost twice as high as among females (32% vs. 17%), and the average male user also has more frequent daily use (6.7 times vs. 5.2 times). Prevalence of ST use is also significantly higher in rural than urban areas, and tends to decrease monotonically with greater education and wealth. Interestingly, among current users, there are no meaningful differences in the intensity of use by rural/urban residence, wealth, or education. In comparing the unadjusted rates of ST use among persons exposed to ST advertising and those not exposed (Table 1), ST use appears slightly higher among those with no advertising exposure, reflecting the lower socioeconomic composition of the no-ad demographic (Table 4) and underscoring the importance of conditioning ST use on demographic factors when trying to disentangle advertising effects. The intensity of daily use, however, is higher among users with recent ad exposure than those without (Table 2). The mean price per use (pouch) of khaini, predominantly the most common form of ST used in India, is 2.8 rupees (approximately 5e6 US cents based on the 2009 market exchange rate), as noted in Table 3. This compares to 50.6 rupees for a pack of 20 cigarettes, and 13.4 rupees for a pack of 20 bidis.
3. Methods The objective of this study is to estimate the effects of tobacco prices and exposure to ST advertising on ST use, as formulated in the following demand specification:
STijk ¼ b0 þ b1 ADijk þ b2 PSTjk þ b3 PCIGjk þ b4 PBIDIjk þ Xijk F þ STATEk J þ εijk (1) Equation (1) denotes that smokeless tobacco use STijk (measured alternately as current use Prob (STijk > 0) or intensity of use among users STijk j STijk > 0) for the ith adult residing in the jth PSU in state k is a function of advertising exposure (AD), the price of smokeless tobacco (PST) in the respondent's PSU, price of other smoked tobacco products such as cigarettes (PCIG) and bidis (PBIDI) in the respondent's PSU, and a vector of relevant individual socioeconomic characteristics (X) including age, gender, rural vs. urban residence, wealth, education, and occupation. The latter also includes former smoking status as a proxy for unobserved personal traits that may be correlated with both current ST use and advertising exposure (such as having a predisposition to tobacco use, or family influences). Its purpose is twofold: it can reduce omitted variable bias, and can be used to explore the link, and potentially
85
infer substitutability, between past use of smoked tobacco and current use of ST. The parameter ε represents individual error term. For models of current ST use, we estimate Equation (1) as a logit regression, and for models of intensity of ST use conditional on current use, we use ordinary least squares (OLS). Current use and conditional intensity of use are modeled separately in a two-part model in order to distinguish between two distinct behavioral processes, where the primary decision to use ST dominates the secondary decision of how much to use; the two-part model is typically used in cases where there is an overabundance of zero outcomes, as in tobacco use (Madden, 2008; Manning et al., 1987). Sampling weights are used in all models to account for complex survey design. Standard errors are adjusted for arbitrary correlation across individuals residing in the same PSU. Identifying the impact of advertising exposure on ST use presents an empirical challenge due to the potential endogeneity of exposure. Exposure to advertising is not randomly determined: advertising messages are likely to be designed for and distributed to selected target populations, which are likely to have a predetermined above-average propensity to use the advertised product (e.g., beer commercials during sports broadcasts, cosmetics ads in women's magazines). The non-randomness of advertising may be magnified by instances of self-selection into advertising exposure, where people who are more likely to consume a product may also be disproportionately more likely to remember and internalize advertisements for that product, and thus more likely to report exposure. The endogeneity of advertising exposure brought by selected targeting and self-selection can therefore introduce an upward bias into the observed relationship between advertising and consumption. On the other hand, as shown in Table 4, individuals who recall exposure to ST advertising differ across observable socio-economic characteristics (for instance, younger, urban, educated, wealthier, current student status, lower propensity to be unemployed) that are also associated with lower ST use. Thus, there appears to be negative selection on these observable characteristics, which suggests that individuals who are exposed to ST ads may also differ along unobservable characteristics (for instance, a lower rate of time preference or greater risk aversion) that may be negatively associated with ST use (Altonji et al., 2005). Thus, while targeting bias may potentially lead to over-estimates of the advertising response, the direction of the selection bias is a priori indeterminate. Altonji et al. (2005), however, suggest that selection on observable characteristics may provide a good gauge of selection on unobservable characteristics, in which case, at least for the sample under study, the potential negative selection bias may lead to under-estimates of the advertising response. We address the endogeneity of individual ST advertising exposure by introducing a plausibly exogenous measure of advertising, and using it to estimate a reduced-form version of Equation (1). We constructed this variable by aggregating the individual self-reports of ST ad exposure among a strategically restricted subsample of GATS respondents, at the PSU level. This subsample consists of never-tobacco-users e persons who have never consumed any form of tobacco, smoked or smokeless e and who are older than 25. Excluding current or former tobacco users from the construction of this variable in essence introduces plausibly exogenous variation across PSUs by reducing the likelihood that PSUs with more tobacco users and higher ST demand would have disproportionately higher advertising exposure rates due to users' excessive propensity to observe advertising. This likelihood is further reduced by excluding persons under the age of 25, on the presumption that younger individuals may be more likely than older ones to be latent/future tobacco users who may share the ad exposure patterns of current tobacco users. The resulting PSU-level advertising exposure
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Table 5 Baseline models of current ST use, marginal effects. Current ST use, baseline model
Individual ST ad exposure ST price Cigarette price Bidi price Former smoker Age Male Rural Education (relative to no education) Completed primary/less than secondary Completed secondary/completed high school Completed college/university or higher Wealth index quintile (relative to lowest) Low Middle High Highest Occupation (relative to employed) Self-employed Student Homemaker Unemployed/retired N
ST price elasticity Cigarette price elasticity Bidi price elasticity
Overall
Male
Female
0.025*** (0.007) 0.018* (0.010) 0.004 (0.007) 0.001 (0.004) 0.061*** (0.014) 0.002*** (0.000) 0.125*** (0.008) 0.021*** (0.007)
0.026*** (0.009) 0.035** (0.015) 0.006 (0.010) 0.002 (0.006) 0.090*** (0.017) 0.000 (0.000)
0.020** (0.010) 0.006 (0.011) 0.002 (0.009) 0.001 (0.005) 0.040 (0.028) 0.004*** (0.000)
0.028*** (0.007) 0.082*** (0.008) 0.116*** (0.012)
0.003 (0.010) 0.060*** (0.012) 0.100*** (0.017)
0.075*** (0.008) 0.140*** (0.009) 0.179*** (0.008)
0.013 (0.008) 0.026*** (0.009) 0.062*** (0.010) 0.112*** (0.012)
0.019 (0.012) 0.018 (0.013) 0.050*** (0.015) 0.117*** (0.018)
0.009 (0.009) 0.026** (0.011) 0.065*** (0.011) 0.081*** (0.014)
0.010 (0.008) 0.204*** (0.010) 0.074*** (0.010) 0.068*** (0.012) 67,571
0.005 (0.011) 0.286*** (0.012) 0.097*** (0.035) 0.059*** (0.016) 32,931
0.002 (0.013) 0.050** (0.022) 0.035*** (0.011) 0.057*** (0.017) 34,640
0.038*** (0.010)
0.004 (0.009)
All
Male
Female
0.091* 0.018 0.006
0.137** 0.022 0.007
0.040 0.011 0.008
Notes. All models include state fixed effects. Estimates are obtained using weights for complex survey design and reflect clustering of the standard errors at the PSU level. *p < .1, **p < .05, ***p < .01. Standard errors in parentheses.
variable is presumably unrelated to the individual potential user's unmeasured characteristics, and thus plausibly exogenous to individual ST demand. In addition to estimating Equation (1) with individual ST ad exposure, as a baseline for comparison, we also estimate the reduced-form specification of Equation (1), replacing the respondent's own exposure with the PSU-level ad exposure. A related econometric concern arises from unobserved state characteristics that may influence both ST use and the policyrelated factors in the analysis (prices and advertising). For instance, states with more pronounced social norms against tobacco may be more likely to introduce higher tobacco taxes or to pass advertising restrictions. Since such states may also have lower rates of tobacco use, the observed link between tobacco use and prices or advertising would be biased unless differences in social norms are addressed. All models therefore control for state fixed effects, relying only on cross-PSU within-state variation, which account for all unobserved heterogeneity across states. 4. Results Table 4 presents unadjusted mean differences in ST use (along with other observed characteristics) between individuals who are exposed to ST advertising and those who are not. These differences may confound potentially counteracting positive and negative bias from selective targeting of ST ads and selective exposure to ST ads. There is no significant difference in the prevalence of ST use between those who are exposed (23.8%) and those who are not (24.7%), though among ST users, the frequency of daily use is significantly higher for those who are exposed. Respondents who reported being exposed to ST advertising are also younger and more
likely to be male, employed, students, urban residents, and have greater education and wealth e characteristics that are generally associated with lower ST use (Table 1). Measurable socioeconomic differences, therefore, appear to be significant predictors of advertising exposure. The multivariate analyses presented below control for these and other socio-economic factors and inform the extent to which the observed unconditional difference in ST use across advertising exposure is driven by these factors and other unobserved heterogeneity. Table 5 presents estimates of Equation (1) for any current ST use. Across the full sample, individual exposure to ST ads is significantly and positively associated with a higher probability of ST use, on the order of 2.5 percentage points, which is about a 10% increase relative to the mean prevalence. This difference of 2.5 percentage points, conditional on socio-economic factors and state fixed effects, is significantly higher than the unadjusted difference (Table 4). The downward bias in the unadjusted difference is consistent with overall negative selection on observable factors e those who are exposed to ST ads appear to differ along observable characteristics which are associated with a lower propensity to use ST, as noted above with respect to Table 4. Thus, it is likely that further accounting for the endogeneity concerns may reveal stronger responses. Before we turn to the reduced-form estimates, we note that the overall advertising response does mask some heterogeneity across gender. Individual ST ad exposure is associated with a higher absolute increase in the probability of ST use among males (2.6 percentage points) relative to females (2 percentage points), though these translate into a higher relative increase for females (11.8% vs. 8.2% in comparison to the mean prevalence rates).
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Table 6 Reduced form models of current ST use, marginal effects. Current ST use, reduced form model
Aggregate ST ad exposure (exogenous measure) ST price Cigarette price Bidi price Former smoker Age Male Rural Education (relative to no education) Completed primary/less than secondary Completed secondary/completed high school Completed college/university or higher Wealth index quintile (relative to lowest) Low Middle High Highest Occupation (relative to employed) Self-employed Student Homemaker Unemployed/retired N
ST price elasticity Cigarette price elasticity Bidi price elasticity
Overall
Male
Female
0.018 (0.027) 0.018* (0.010) 0.004 (0.007) 0.001 (0.004) 0.062*** (0.014) 0.002*** (0.000) 0.127*** (0.008) 0.022*** (0.008)
0.026 (0.037) 0.035** (0.015) 0.006 (0.010) 0.003 (0.006) 0.091*** (0.017) 0.000 (0.000)
0.074*** (0.027) 0.005 (0.011) 0.002 (0.009) 0.001 (0.005) 0.041 (0.028) 0.004*** (0.000)
0.026*** (0.007) 0.081*** (0.008) 0.115*** (0.012)
0.004 (0.010) 0.059*** (0.012) 0.098*** (0.017)
0.073*** (0.008) 0.140*** (0.009) 0.179*** (0.008)
0.012 (0.008) 0.023** (0.009) 0.060*** (0.010) 0.109*** (0.012)
0.017 (0.012) 0.014 (0.013) 0.045*** (0.015) 0.111*** (0.018)
0.009 (0.009) 0.025** (0.011) 0.066*** (0.011) 0.082*** (0.014)
0.010 (0.008) 0.204*** (0.010) 0.074*** (0.010) 0.069*** (0.012) 67,737
0.004 (0.011) 0.285*** (0.012) 0.089** (0.035) 0.060*** (0.016) 32,994
0.003 (0.013) 0.050** (0.022) 0.036*** (0.011) 0.058*** (0.017) 34,743
All
Male
Female
0.090* 0.019 0.007
0.136** 0.022 0.010
0.038 0.011 0.007
0.036*** (0.011)
0.009 (0.009)
Notes. All models include state fixed effects. Estimates are obtained using weights for complex survey design and reflect clustering of the standard errors at the PSU level. *p < .1, **p < .05, ***p < .01. Standard errors in parentheses.
Higher ST prices are also significantly negatively associated with ST use, with an estimated elasticity of 0.09. Virtually all of this response, however, is driven by males; the own-price elasticity among males is estimated at 0.14. Though we include the prices of cigarettes and bidis to explore the role of these products as substitutes or complements to ST, we do not find any significant effects of these other tobacco prices on current ST use. The effects of other covariates are generally consistent with the tobacco literature (see for instance, Dave and Saffer, 2013) and follow patterns of use reflected across socio-economic characteristics (shown in Table 1). Males have a higher likelihood or using ST, and prevalence is particularly higher among males residing in rural areas. There is a strong education gradient, and ST consumption also monotonically declines with higher educational attainment. Prior studies have shown that educated individuals are more allocatively efficient in health production, and are therefore less likely to engage in risky behaviors such as tobacco and other substance use (Grossman and Kaestner, 1997). The likelihood of using ST is also lower among those who are unemployed or out of the labor force (students, retirees, homemakers) relative to those who are employed. Based on estimates for the various wealth quintiles, ST use has a negative wealth elasticity consistent with tobacco consumption generally constituting an inferior good. However, with respect to the intensity of ST use among current users (Tables 7 and 8), we generally find the opposite. Once an individual has decided to consume ST, their intensity of use generally rises with wealth. Having a history of smoking is positively and significantly correlated with ST demand. This effect may be an expression of unobserved propensity to use any form of tobacco that tobacco users may share. On the other hand, it may also be an indication of temporal substitutability between smoked and smokeless tobacco
e if those who currently use ST are more likely to be former smokers, then ST may have served as a path towards smoking cessation. Given that the advertising effects, based on individual ST ad exposure, may be biased due to the endogeneity concerns noted above, Table 6 presents the reduced-form effects of the aggregated ad exposure measure that is plausibly exogenous to the respondent's ST demand. These estimates suggest that advertising exposure is not significantly associated with current ST use among males. Among females, however, the advertising effect is sizeable and statistically significant at 0.074, suggesting that ST advertising exposure would raise the propensity to use ST by 7.4 percentage points. The higher advertising response among females may reflect their significantly greater relative prevalence of ST use; the vast majority (85%) of female tobacco users consume ST, compared with 49% of male tobacco users. Thus, given that most females who are at-risk of using tobacco (current or potential users) end up consuming ST, possibly due to the higher stigma associated with smoked tobacco, they are likely more sensitive to ST advertising. Estimates of the own-price elasticity, and the effects of the other measured factors, remain robust. Tables 7 and 8 present corresponding models, based on individual ST ad exposure and aggregate ST ad exposure respectively, for the intensity of ST use among current users. Estimates (Table 7) suggest that the individual-specific measure of exposure to any ST advertising is positively and significantly associated with the intensity of use. Overall, exposure is associated with an increase in ST use by about one time per day, which translates to a 16% increase relative to the mean. The advertising response is significantly stronger among females (an increase of daily frequency of use of 2.27 times) than males (0.63 times). The reduced-form estimates
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Table 7 Baseline models of ST use intensity among users. Average number of ST uses per day, baseline model
Individual ST ad exposure ST price Cigarette price Bidi price Former smoker Age Male Rural Education (relative to no education) Completed primary/less than secondary Completed secondary/completed high school Completed college/university or higher Wealth index quintile (relative to lowest) Low Middle High Highest Occupation (relative to employed) Self-employed Student Homemaker Unemployed/retired N
ST price elasticity Cigarette price elasticity Bidi price elasticity
Overall
Male
Female
0.990*** (0.224) 0.438* (0.247) 0.219 (0.234) 0.089 (0.095) 0.859** (0.344) 0.011** (0.005) 1.280*** (0.265) 0.181 (0.196)
0.626*** (0.224) 0.559* (0.302) 0.338 (0.310) 0.014 (0.119) 0.945** (0.368) 0.013** (0.006)
2.273*** (0.515) 0.384 (0.360) 0.004 (0.251) 0.173 (0.127) 1.257 (0.768) 0.034*** (0.008)
0.579*** (0.197) 1.078*** (0.257) 1.247*** (0.357)
0.426* (0.248) 1.132*** (0.287) 1.285*** (0.381)
0.135 (0.220) 0.106 (0.221) 0.637** (0.294) 0.148 (0.323)
0.140 (0.292) 0.363 (0.294) 0.805** (0.370) 0.316 (0.411)
0.150 (0.215) 0.991 (0.626) 1.010*** (0.289) 0.794*** (0.273) 15,307
0.159 (0.227) 0.392 (0.816) 0.210 (0.908) 0.501* (0.299) 9459
0.957** (0.411) 1.212*** (0.442) 1.315*** (0.358) 1.626*** (0.509) 5848
All
Male
Female
0.069* 0.035 0.014
0.081* 0.049 0.002
0.095 0.001 0.043
0.367 (0.253)
0.076 (0.276) 0.660** (0.262) 0.903** (0.393) 1.502 (0.949) 0.113 0.087 0.633 0.152
(0.291) (0.283) (0.479) (0.477)
Notes. All models include state fixed effects. Estimates are obtained using weights for complex survey design and reflect clustering of the standard errors at the PSU level. *p < .1, **p < .05, ***p < .01. Standard errors in parentheses.
(Table 8) suggest a similar pattern. Accounting for the endogeneity of the individual's own-recalled ST ad exposure, the reduced-form models indicate that advertising exposure (based on the aggregate exogenous measure) raises daily frequency of use by 1.7 times for the overall sample (approximately 27% increase relative to the mean). The effect magnitude is larger among females (2.5 times) than males (1.3 times), though the effect for males is not statistically significant. Higher ST prices are also found to reduce ST use at the intensive margin, though we cannot reject the hypothesis that this price response is the same for both males (elasticity of 0.076) and females (0.085) (Table 8). Combining both of the price responses at the intensive margin with those at the extensive margin (Table 6), we can derive the total own-price elasticity of ST use: 0.21 for males, and 0.12 for females. These compare with own-price elasticity estimates of 0.35 for cigarettes and 0.91 for bidis in India (John et al., 2010), and own-price elasticity estimates of 0.3 to 0.6 for cigarettes and smokeless tobacco in the U.S. (Dave and Saffer, 2013). While the cross-price elasticity estimates for cigarettes and bidis are imprecise and not statistically significant, and thus should be interpreted with caution, there is some suggestive evidence of economic complementarity at the intensive margin, at least contemporaneously and cross-sectionally, higher cigarette prices may weakly reduce the intensity of ST use among current users. The cross-price elasticity (with respect to cigarettes) is somewhat larger in magnitude for males (0.05 vs. 0.02); this may reflect the higher prevalence of dual-users among males, wherein about 19% of male tobacco users consume both smokeless and smoked forms, compared to only 5% of female tobacco users (Bhawna, 2013).
5. Discussion Evidence on how policy-relevant factors such as prices and advertising exposure impact smokeless tobacco use is quite limited, and most of this research is based on the U.S. where the smokelessvs-smoked pattern of tobacco use is generally reversed compared to India. The limited research on the demand for ST products may not generalize to populations in developing countries such as India. This study provides the first estimates of the extent to which ST use among the adult population in India responds to prices and advertising exposure, based on recent nationally representative data from GATS India 2009. We find that ST advertising is more likely to influence women with respect to both prevalence and intensity of ST use, while men are more likely to respond to changes in ST price. We estimate that among adult males in India, the total price elasticity of ST demand is 0.212, which is nearly identical to one of the estimates reported for adolescent males in the US (0.20, Tauras et al., 2007, 0.59, Chaloupka et al., 1997), and close to the estimate reported for adults in the US (0.15, Ohsfeldt et al., 1997). It is lower than the estimate reported for middle-school-aged youths in India (0.59, Joseph and Chaloupka, 2014), which is consistent with the expectation that price sensitivity decreases with aging as income constraints relax. We do not find strong direct evidence on the economic substitutability or complementarity of smoked and ST products. However, the positive association between former smoking and current ST use may point to temporal substitutability at the individual level; if former smokers are more likely to currently use ST, product switching may be likely. This is consistent with evidence from the U.S. (Dave and Saffer, 2013), which is suggestive of some smokers
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Table 8 Reduced form models of ST use intensity among users. Average number of ST uses per day, reduced form model
Aggregate ST ad exposure (exogenous measure) ST price Cigarette price Bidi price Former smoker Age Male Rural Education (relative to no education) Completed primary/less than secondary Completed secondary/completed high school Completed college/university or higher Wealth index quintile (relative to lowest) Low Middle High Highest Occupation (relative to employed) Self-employed Student Homemaker Unemployed/retired N
ST price elasticity Cigarette price elasticity Bidi price elasticity
Overall
Male
Female
1.707** (0.859) 0.397 (0.242) 0.235 (0.229) 0.100 (0.095) 0.863** (0.347) 0.009* (0.005) 1.338*** (0.265) 0.108 (0.199)
1.275 (1.095) 0.522* (0.294) 0.348 (0.305) 0.035 (0.119) 0.947** (0.369) 0.014** (0.006)
2.487** (1.005) 0.365 (0.367) 0.080 (0.248) 0.161 (0.133) 1.358* (0.758) 0.030*** (0.008)
0.504*** (0.194) 0.982*** (0.256) 1.107*** (0.355)
0.364 (0.245) 1.052*** (0.286) 1.177*** (0.379)
0.576** (0.259) 0.767* (0.399) 1.308 (0.985)
0.130 (0.220) 0.141 (0.220) 0.680** (0.292) 0.174 (0.324)
0.155 (0.294) 0.355 (0.295) 0.807** (0.368) 0.303 (0.414)
0.139 (0.300) 0.216 (0.280) 0.788* (0.475) 0.253 (0.491)
0.144 (0.214) 1.052* (0.626) 1.029*** (0.290) 0.802*** (0.274) 15,353
0.159 (0.226) 0.431 (0.811) 0.092 (0.860) 0.511* (0.299) 9484
0.969** (0.412) 1.353*** (0.448) 1.349*** (0.376) 1.609*** (0.516) 5869
All
Male
Female
0.063 0.037 0.016
0.076* 0.051 0.005
0.085 0.019 0.037
0.318 (0.259)
0.232 (0.278)
Notes. All models include state fixed effects. Estimates are obtained using weights for complex survey design and reflect clustering of the standard errors at the PSU level. *p < .1, **p < .05, ***p < .01. Standard errors in parentheses.
potentially using ST as a pathway towards reducing or quitting smoking. We find some weak evidence, especially for males, that contemporaneously cigarettes and ST may be economic complements, which is consistent with a high prevalence of dual concurrent use of both smoked and smokeless tobacco among Indian males. The estimates from this study suggest that cost-based policies such as higher excise or ad valorem taxes may be more effective in reducing ST use among adult males relative to females. It is somewhat surprising that in adulthood, females in India are found to be less price-sensitive than males in their ST use. Studies from developing countries that compare tobacco use by gender tend to find that women's tobacco use is generally more responsive to prices. In the only prior study that is specific to India, girls have been found to be more price-sensitive than boys in consuming both smoked and ST products, and boys do not show a significant response to ST prices (Joseph and Chaloupka, 2014). It is conceivable that as women age, their response to incentives changes in a different way than it does for men. In the case of India, ST prices appear to lose impact for women during adulthood, when advertising emerges as a stronger factor; the opposite happens in adult men who tend to be less influenced by advertising exposure but appear responsive to prices. As noted earlier, about 85% of females in India who use tobacco do so in the form of ST; if this high relative rate of ST use also coincides with a greater addictive ST stock, then recent research based on neuroeconomics indeed suggests that such individuals would be more responsive to advertising but less responsive to price (Saffer et al., 2015). When it comes to advertising, one policy option is to ban advertising. Since 2009, 17 of 31 states in India have implemented bans on the sale of a common type of ST, gutka, and 16 states
increased the VAT tax level for ST between 2010 and 2013. More recently, Assam became the first state to ban the sale, consumption, and advertising of all forms of smokeless tobacco. A relatively large body of research exists on the link between advertising policy instruments and cigarette smoking; even so, the evidence is often divided: comprehensive literature reviews in Blecher (2008) and Saffer and Chaloupka (2000) point to a nearly equal split between the number of studies finding positive advertising effects and weak advertising effects, with potential differences in the effects depending on the intensity of the advertising policy instrument (Saffer and Chaloupka, 2000) and methodological issues (Dave and Kelly, 2014). Our findings add to this literature in the context of ST, and suggest that a complete advertising ban of ST products in India could reduce ST use from about 16% to 9% among females, and reduce the intensity of daily use among females, conditional on ST use, from about 5 times to 2.5 times. While we do not find significant advertising responses among males, the effect magnitudes suggest that there may be a small decline in the intensity of use among current male users if advertising is restricted. If ST and smoked tobacco are intertemporal substitutes, as weakly suggested in this study as well as some prior U.S.-based research, then policymakers may need to complement ST bans with anti-smoking policies and monitor smoking rates in order to minimize concerns of substitution from ST to smoked tobacco over time. Wealth appears to provide opposing incentives in the decision to use ST versus how much to use. We find that ST use is inversely related to wealth, suggesting that the decision to use ST can be characterized as an inferior good. In contrast, for people who have already chosen to consume smokeless tobacco, ST appears to be a normal good, as wealth is positively related to their consumption intensity. This difference has policy implications in so far as shifts in
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