(WHO 2007). In contrast, annual tobacco-related health costs are estimated at US$81 billion in the United States, nearly US$7 billion in Germany, and US$1 billion in Australia (Guindon et al. 2007). Goodchild, Nargis, and Tursan d’Espaignet (2018) find that tobacco-related diseases accounted for 5.7 percent of global health expenditure in 2012 and that the total economic costs of smoking, including health expenditure and productivity losses, were equivalent to 1.8 percent of the world’s GDP (US$1.9 trillion in purchasing power parity U.S. dollars). The highest share, according to these authors, was in high-income countries (US$1.1 trillion in purchasing power parity dollars), where the tobacco epidemic is the most advanced.<sup>4</sup> Nearly 40 percent of these costs are concentrated in developing countries, reflecting the substantial burden experienced by this group of countries. Earlier estimates of Lightwood et al. (2000) indicate that the gross health costs of tobacco in highincome countries are between 0.1 percent and 1.0 percent of GDP. Likewise, Pichón-Riviere et al. (2014) estimate the annual direct costs of tobacco-related disease in the Chilean health system at approximately 0.6 percent of GDP.

Tobacco price increases are also associated with expansion in productive life years. Verguet et al. (2015) analyze the health effects of a price increases in China and conclude that a 50 percent rise in prices would result in 231 million life years gained over 50 years and would have a significant impact among the poor. In contrast, PichónRiviere et al. (2014) estimate that tobacco use in Chile would reduce life expectancy by nearly 4.0 years among women and 4.3 years among men. On Indonesia, Ahsan et al. (2013) estimate that, if taxes were increased to 57 percent of the retail price, 1.96 million tobacco-related deaths would be averted. Similarly, if taxes were raised even more, to 70 percent, the number of deaths averted would increase to over 5 million.

Similarly, exposure to secondhand smoke has a strong relationship with many respiratory diseases among children and adults (DHHS 2004, 2014; Mason, Wheeler, and Brown 2015; Öberg et al. 2011). In Indonesia, more than 97 million nonsmokers are constantly exposed to secondhand smoke (Barber et al. 2008). According to WHO (2017a), secondhand smoke is responsible for over 890,000 premature deaths per year. In the United States, exposure to secondhand smoke costs an estimated US$5 billion annually in direct medical costs and over US$5 billion more in indirect medical costs, that is, disability and lost wages (Behan, Eriksen, and Lin 2005). In the state of Indiana, the health-related costs of secondhand smoking have been estimated at more than US$1.3 billion annually (Mason, Wheeler, and Brown 2015). McGhee et al. (2006) estimate the cost of direct medical care, long-term care, and productivity losses because of secondhand smoke exposure in Hong Kong SAR, China, at approximately US$156 million annually.

Tobacco taxation has been recognized as one of the most effective tobacco control strategies. In high-income countries, a 10 percent increase in the price of cigarettes is associated with a decrease in the demand for cigarettes of approximately 4 percent (World Bank 1999). In low- and middle-income countries, an equivalent increase is associated with an average 6 percent reduction in cigarette consumption (Chaloupka et al. 2000). Higher taxes have the additional benefits of reducing exposure to secondhand smoke and increasing government revenues. Djutaharta et al. (2005) estimate that a 10 percent increase in price would reduce total cigarette consumption in Indonesia by 6 percent. The decrease would be higher (7 percent) among low-income households and lower among wealthier ones (3 percent). Moreover, the study estimates that a 50.0 percent tax increase would raise tobacco tax revenues by 27.5 percent. A similar study by Barber et al. (2008) estimates that raising cigarette taxes to 50 percent of the retail price can decrease the expected mortality rate by 2 percent–5 percent. Adioetomo, Djutaharta, and Hendratno (2005) simulate the impact of a 10.0 percent tax increase and find that the subsequent increase in cigarette prices (4.9 percent) causes a 3.0 percent decline in consumption.

Other tobacco control interventions are also relevant in decreasing demand, but have a smaller impact on tobacco consumption. Several studies have found that public health awareness campaigns contribute to a

> 4 Goodchild, Nargis, and Tursan d’Espaignet (2018) estimate the economic cost of smoking-attributable diseases at US$15 billion in low-income countries, US$359 billion in lower-middle-income countries, and US$354 billion in upper-middleincome countries, all in purchasing power parity U.S. dollars.

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