Estimating the impacts of waterpipe tobacco taxation on demand: Evidence from a subgroup analysis in Lebanon
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American University of Beirut, Beirut, Lebanon
Free University of Brussels, Brussels, Belgium
Imperial College London, London, United Kingdom
George Mason University, Fairfax, Virginia
Birzeit University, Birzeit, Palestine
Jordan University of Science and Technology, Irbid, Jordan
Ain Shams University, Cairo, Egypt
University of Florida, Gainesville, United States
Publication date: 2022-07-05
Tob. Prev. Cessation 2022;8(Supplement):A12
Differential demand elasticities for WTPs across various population subgroups and differential response patterns to taxation, need to be considered in tobacco taxation policies.

This article aims at modelling the demand for waterpipe tobacco smoking (WTS) across various population groups in Lebanon.

We estimated own- and cross-price elasticities of demand for waterpipe tobacco products (WTPs) using a volumetric choice experiment that yielded waterpipe tobacco purchase data from a nationally representative tobacco survey conducted in 2019.

While own-price elasticities for premium cigarettes are significantly different across two out of three population subgroups, documenting statistically significant differential price responsiveness across different sub-populations for WTPs varies with the cut-off used to define subgroups. We document different price sensitivities towards discounted WTPs between younger (aged 18–45 years) and older smokers (aged >45 years), the latter being significantly more price responsive (elasticities of -1.6 and -2.1, respectively). Our findings also reveal that smokers with high-income levels are significantly less responsive to changes in prices of premium waterpipe café products in comparison to smokers with low-income levels (elasticities of -2.2 and -2.9, respectively). Lastly, we document that light smokers are significantly more sensitive than heavy smokers to price changes of discounted waterpipe café products (elasticities of -2.5 and -1.8, respectively). We additionally examine the impact of waterpipe tobacco specific excise taxation on consumption by simulating various tax scenarios ranging from a ‘status quo’ scenario reflecting past policy in Lebanon to a tax level amounting to 75% of the total retail price. Our findings suggest that a 75% scenario yields a substantial reduction in waterpipe tobacco consumption ranging from 78% to 95% fewer waterpipe tobacco sessions across population groups. Reduction rates are almost equal for younger and older smokers, and relatively more pronounced for low-income and heavy smokers in comparison with high-income and light smokers.

These findings support the need to account for differential demand elasticities for WTPs across various population subgroups, and the differential response patterns to taxation, when considering tobacco taxation policy.