A Consideration of Public Policy to Reduce Smoking

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Recommended: Banning smoking in public places

A Consideration of Public Policy to Reduce Smoking

Government justification for its attempts to reduce smoking are based

around the key points that:

* Smoking damages health and increasing the price of a packet of

cigarettes will reduce the number of smokers.

* Revenues raised from the tax on tobacco will help to offset costs

to the National Health Service from smoking related illnesses.

a) Price elasticity of demand measures how much quantity demanded

responds to changes in the price. The price elasticity of demand for a

packet of cigarettes is about 0.4, this is an example of a product

with an inelastic demand (because p.e.d<1). If the government wants to

reduce smoking by 20% then the price of cigarettes must be increased

by 50%. The price of cigarettes is currently £2.00 (50% 0f £2.00 is

£1.00 ), meaning that the new price should be £3.00. The method of

calculating this increase in price is shown below along with an

example of an inelastic demand curve.

[IMAGE]

b) If the Government permanently increases the price of cigarettes,

the policy will have a far greater effect in five years time than in

one years time. This is because cigarettes are a drug that are more

addictive than many illegal drugs. Products with an inelastic demand

are considered to be a necessity rather than a luxury which further

emphasises the point that smokers simply cannot live without

cigarettes. The inelasticity of cigarettes shows that there are few

close substitutes, only rolling tobacco, pipe tobacco and cigars are

currently available as alternatives and, like cigarettes, are

extremely bad for your health. This means that they too are likely to

have their prices increased alongside cigarettes. An increase in the

price of cigarettes, however, is definitely not going to entice more

people to start smoking and it is here that the real benefits of an

increased price will be seen. If less people start smoking now, then

in only a few years time we will notice a drastic decline in the total

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