Friday, May 04, 2007

NRT promotion can increase incentives to smoke

While I retain my view that smokeless tobacco and nicotine replacement therapies (NRT) are a more healthy way for a nicotine addict to access their nicotine, a crucial difficulty in promoting such products is that they may reduce disincentives to smoke. Thus if the constraints on initiating a smoking habit are the anticipated long-term health costs that stem from an anticipated addiction to nicotine that is costly to reverse, any substance, such as NRT, which reduces the cost of quitting, might increase the incentive to initiate use.

In the past I have made much the same point in relation to drugs such as heroin. Successful low cost treatments for heroin addiction might encourage use which then worsens aggregate public health.

A recent NBER paper by Henry Saffer, Terry Wakefield and Yvonne McElrath, The Effect of Nicotine Replacement Therapy Advertising on Youth Smoking, abstracts its main findings as follows:

NRT advertising could decrease smoking by informing smokers that the product can make quitting easier and thus inducing more smokers to try and quit. However, a moral hazard is created because NRT advertising increases the expectation that cessation is relatively easy. NRT advertising could thus induce youth to smoke, to smoke more and/or to delay quit attempts. Data from Nielsen Media Research (Nielsen) and the Monitoring the Future Surveys (MTF) have been used in the empirical work. The Nielsen data are matched to the MTF data by month, year and market. The availability of lagged advertising data allow for calculation of an advertising stock variable. The Nielsen data also measure exposure to national advertising on a local level which allows for use of national advertising data. An exogenous shock allows for bypassing problems of endogeneity. The results indicate that NRT advertising has no effect on participation but increases smoking by youth who do smoke. The elasticity of smoking with respect to NRT advertising is about .10 and the elasticity of smoking with respect to price is about -1.03. Since average youth smoking is about 5.77 cigarettes per day, an increase of 10 percent in NRT advertising would increase this average to about 5.82 cigarettes per day. It is also estimated that a ban on NRT advertising would be equivalent to a 10 percent increase in cigarette prices.
This is a very interesting argument and suggests the need for caution in endorsing NRT and smokeless tobacco products. Moreover it is difficult to see how the adverse incentive effects discussed here can be negated because their effects operate through the consequences of forward looking behaviour on new smokers. I welcome comments from readers on this one.

Thanks to David Jeffery from Oikos for pointing out the SMH article which led me to the Saffer et al. reference.


rabee said...

Adolescents and twenty somethings seem to have very high discount rates. So i doubt that any information about future consequences of choices will have much of an affect on behavior.

Eventually they grow up and realize looking back that their preferences were time inconsistent.

In my opinion the best advertisements against early life smoking would be one's that emphasize immediate effects of smoking. Unfortunately there seems to be very few immediate ill-effects (apart from stinking). Perhaps we can make something up; when kids find out it was all a fantasy they will forgive us and even thank us.

hc said...

I think you are right on the discount rates of youth. But promoting NRTs did have an effect.

Getting addicted is a short-term phemonenon - say 180 days for males, less for females. Maybe the promise of NRT still bites obver this horizon if concern is with getting addicted rather than long-term health costs.

Francis Xavier Holden said...

I think younger smokers value coolness above the non-coolness of anxiety about future health discounts, same as a part of them do about speed (driving speed not speed speed) and binge drinking.

harry - you got anything on smoking dis-incentives in places like asia where there is bugger all taxes on ciggies?

I think last time I was through Sinagapore I got a carton of ciggies for my Scottish sister-in-law at about 10% of the price in Scotland or here.

I know when I was in Taiwan I indulged in sweet clove packed cigarettesm, which even the thinlipped non smokers enjoyed the smell of, mainly because they were so bloody cheap, and thick and tasty.

Heineken beer was about 33c aud at the 24 hour 7/11 up the corner of the block and whisky and brandy were cheap at the 7/11 and elsewhere too. But to get a bottle of ordinary red was very difficult. When I did it tended to be Jacobs Creek at about aud$22. bah. So naturally being a rational consumer I stuck to Heineken, scotch and clove ciggies.

Amazing how as an oz travellor once of the things I missed most, and others tell me the same story, was access to cheap decent everyday drinking reds overseas.

rabee said...


This is from the abstract that you posted

"The results indicate that NRT advertising has no effect on participation but increases smoking by youth who do smoke."

* no effect on participation
* increases smoking by those who smoke

So NRT advertising is basically decreasing the number of youth smokers who quit. It is having an affect on people that are already addicted and not on people who are not addicted. It has no affect on initiating a smoking habit.

hc said...

Rabee, Yes you are right.