Correlation Between Consumption Of Cigarettes And Price

This article is very informative toward the purpose of increasing excise taxes. I believe that Joey Connor did an excellent job at pointing out the effects of the tax increase on tobacco products. He provided information on previous tax rates, so readers can have a clear idea of the increase percentage of taxes. He also supported his arguments by incorporating other sources in his article. For instance, he incorporated the analysis done by the National Public Radio on how the increase in price of cigarettes will affect the consumer behavior.

The state of Pennsylvania already leads the nation in the collection of “sin taxes’, collecting over $2.6 billion every year. The proposed tax of 40% on e-cigarettes would raise the cost of a product, which is often a substitute for traditional cigarettes. In addition, to this tax

"Use of e-cigarettes has grown quickly in the last decade, with U.S. sales expected to reach $4.1 billion in 2016." Electronic cigarettes are substitutes to cigarettes. As the price of one good increases, the quantity demanded of that good, and thus the quantity demanded of the substitute good would increase. This is evident on the graph below. As the tax causes a price increase from P1 to P2,the quantity demanded of e-cigarettes also increases from Q1 to Q2. Cigarettes and e-cigarettes would therefore have a positive cross-price elasticity of demand which would be small in the short term but large in the long term. It is extremely difficult for people to switch any addictive habit. However, over the long term, citizens would have time to adapt and switch to electronic

There are many cities who have implemented bans on cigarettes, but China overall is still the leading consumer of cigarettes in the world. A countrywide tax on cigarettes has been proposed to their Ministry of Finance, and Ministry of Economics and Trade, but a decision has yet to be made. Tobacco production provides substantial revenue to the government and a tax increase will have a significant effect on the central government and reduction of consumption of cigarettes. According to a study done by the group proposing the tax, “a 25% tax increase will have an overall monetary benefit that far exceeds the negative impact on the cigarette industry and tobacco farmers. In financial terms alone, not counting the number of lives saved and medical care cost savings, the gain of the central government tax revenue (24.58 billion Yuan) twice exceeds the loss of tobacco farmers’ earnings, tobacco industry workers’ earning and loss of industry and local government revenue (11.74 billion Yuan)” (Hu TW 107). There many components to this calculation, but some factors included the reduction of cigarette consumption, the number of lives saved, savings in medical care costs, gains in productivity due to avoidance of premature death, industry revenue lost, lost jobs in cigarette industry, loss of tobacco income, and loss of local government

The error in the conclusion in this example would be that the linear correlation found between the number of cigarettes and the pulse rate suggests causality. While we can determine that there is a correlation between the pulse rate and number of cigarettes smoked, we cannot prove that the increases in number of cigarettes smoked cause increases in pulse rates, exclusively. Both variables might be affected by some other existing variable. Simply having a correlation between two variables doesn’t imply a causal relationship. To prove a causal relationship, further analysis is required. While a linear correlation shows the strength of the relationship between the two variables, but it does not show that the one variable is changing at direct

The use of tobacco products is just one of many factors that influence the price of insurance. Unlike some other deciding factors of insurance prices, people choose to use tobacco products. There is plenty of information about the dangers of tobacco products. Tobacco products’ packaging warns that use of the products will have negative effects on a person’s health. There are also numerous public service announcements circulating on television and the internet warning people to stay away from tobacco. Many systems are also available, often paid for by insurance companies, that will help a person quit using tobacco. These vary widely, from patches that a person wears, to nicotine gum. The increase in the cost of insurance for tobacco users

Changes to indirect taxes in particular can have an effect on the pattern of demand for goods and services. For example, the rising value of duty on cigarettes and alcohol is designed to cause a substitution effect among consumers and thereby reduce the demand for what are perceived as “de-merit goods”. In contrast, a government financial subsidy to producers has the effect of reducing their costs of production, lowering the market price and encouraging an expansion of demand.

Even simpler, Guindon et al.158 analyze the trend of cigarette affordability by considering the annual real percentage changes in cigarette

Cigarette taxation is the fastest growing revenue in the United States. The article says that about 1.3 billion people around the world smoke, which is really high. All over America, underage smoking is happening, and the government thinks raising the taxes on cigarettes is a way they can stop this. According to the article, if the government increases cigarette taxes by 50%, it reduces the overall consumption of cigarettes by 20%. This is because a rise of price will mean that people spend less as they have to pay more from the income. Taxes on cigarettes could be raised because higher taxes on cigarettes will lower the overall consumption but there are disadvantages as well.

A correlational is the evaluation of a relationship between two scale variables (Mirabella, 2011). Correlations are valuable because they can show a predictive relationship that can be exploited in repetition. Correlation is not causation. One situation in which a relationship exists in which people tend to jump to false conclusions about one variable causing the other is a person that smokes cigarettes. Some people feel if a person smokes cigarettes, he or she will eventually get cancer. Now, cigarettes can be related to cancer but I feel this one variable cannot be the major cause of cancer. Some people get cancer that has never smoked in their entire life! Strong skepticism was expressed when, based on extrapolations from epidemiological

The American lung association estimated if the cost of one pack cost $5.5 then the cost of production for that pack would be $18. Cleary the tobacco industry does not do any good to the economy, it only taking over 3 times the amount from the economy. Although some states have been trying to cover health expenses by rising taxes to pay for healthcare however it will never be high enough to cover them. In addition to this, the use of tobacco decrease workers’ productivity. For instance, a smoker would be absent from work and still getting paid and their absences usually last longer because their health conditions would be more complicated. It is clearly proven that the expenses does not match the revenues therefore it would be more profitable

Since the tax hike in 2009, statistics shows nearly three million people smoked less in 2010 than the year prior (Cauchon). This model can be effectively applied on that of the fast food industry. By adding a simple flat tax on foods excessively unhealthy foods, the ability to pay for such meals will decrease exponentially and in turn help American health. The money gained from the tax can not only help lower the prices of foods considered healthy, but also raise revenue for money-starved

The tobacco industry is important to the economy. In 1991, worldwide tobacco sales exceeded $59.8 billion and in 1992 the industry was rated as one of the top one hundred advertisers (Pechmann and Ratneshwar, 1994). However, there are high prices to pay - socially, economically, and personally - as a result of this industry. Annual mortality figures indicate that cigarette smoking is the number one cause of preventable death in the United States. An estimated 390,000 people die each year of smoke related illnesses, which is greater than the combined mortality for cocaine, crack, AIDS, homicide, suicide, and alcohol abuse (Botvin, G., Baker, Botvin, E., Dusenbury, Cardwell, and Diaz, 1993).

Demand, "shows the various amounts of product that consumers are willing and able to purchase at each of a series of possible prices during a specified period of time." (48). Since we know that demand is the amount of a product consumers are willing to purchase we can develop a strategy on cigarettes, that will make the product more difficult for the consumer to buy it. In our organization I feel we should write letters to many government officials and force a increase of taxes of cigarettes. Price plays a major role on the demand for cigarettes because many people will not be able to afford it. Research states that more people with low income smoke rather then higher income people, so with the increase of price on cigarettes it will directly affect the demand because people will eventually have no option, but to quit smoking.

Therefore, The importance of the Price Elasticity of Demand in a government decision to impose a specific tax on the buyers of cigarettes lies in the fact that the elasticity of