preview

A Consideration of Public Policy to Reduce Smoking

opinion Essay
784 words
784 words
bookmark

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

In this essay, the author

  • Explains that government justification for its attempts to reduce smoking is based around the key points that: * increasing the price of cigarettes will reduce the number of smokers.
  • Explains that price elasticity of demand measures how much quantity demanded responds to changes in the price.
  • Explains the method of calculating this increase in price along with an example of an inelastic demand curve.
  • Analyzes how smoking is considered a necessity rather than luxury, and the inelasticity of cigarettes shows that there are few close substitutes, like rolling tobacco, pipe tobacco and cigars.
  • Opines that an increase in the price of cigarettes is definitely not going to entice more people to start smoking and the real benefits of an increased price will be seen.
  • Explains that the longer the time period, the more price elastic is the demand for the product.
  • Explains that an addiction cannot simply be forgotten about, but with enough will power, the number of people who still buy cigarettes at the new, higher price will decrease.
  • Explains that a 50% increase in price will result in 20 % decrease in demand.
  • Explains commodity share, which is the amount spent on a good as part of total income. the higher the % of income spent, the higher price elasticity of demand.
  • Explains that most adults who smoke have probably done so since an early age, either when they were not fully aware of the health implications, or simply didn't care. somebody addicted to nicotine for many years will find it harder to shed their addiction.
  • Concludes that the government policy to reduce smoking by increasing should be implemented.
  • Opines that the price of cigarettes will work, but it will take a long time. some people simply don't want to give up smoking and will carry on regardless.
  • Opines that a better method for reducing the number of smokers would be to increase the price less and make up for this by banning tobacco advertising within the community.
  • Cites colin ash's lecture notes, n. gregory mankiw, principles of economics third edition, 88honeylane.com/politics_smoking/, legislation and policy.
Get Access