Extended Cost-Benefit Analysis of Tobacco Consumption in Mexico by Gender

This Report was written by Centro de Investigación Económica y Presupuestaria A.C. (CIEP) in Mexico. The report estimates the price elasticities of demand for tobacco by gender and assesses the longer-term impact of raising tobacco prices on with an extended cost-benefit analysis. The findings show that a 10% increase in cigarette prices would reduce consumption by 2.2% among women and 5.4% among men, suggesting that men are more sensitive to price than their counterparts. Using this input, the researchers simulate a 1 peso increase in the specific tax component per cigarette which, increasing the price 33%. This price increase would reduce quarterly tobacco spending by 174 pesos, on average, including 204 pesos for women, on average, and 134 pesos for men. Medical costs would also decrease, especially for men, who experience much higher smoking-related health costs at the baseline, likely due to a gender gap in access to health services or disposable income. Specifically, smoking-related medical costs for men and women would decrease by 8.7% and 1.8%, respectively. Men would also gain more years of working life in this scenario compared to women, with an increase of 2.3 years compared to 0.09 years. Overall, a 33% cigarette price increase would increase disposable income for 8.4% among men and 1.5% among women. The report concludes with recommendations for policy makers to strengthen tobacco taxes to benefit both genders, especially as social norms are changing and smoking prevalence among women is increasing.

[SPANISH]