# **B. Tobacco Price Elasticity by Decile**

Let Qid be defined as the average quantity smoked per day by individual i in income decile d; P the average price per cigarette (unit value of tobacco use); Di the consumption decile of individual i; and Xid the individual characteristics. Then, the smoking intensity equation is written as follows: ln Qid = β0 + β1lnP∗Di + β3Xid + μid (B.1) The empirical analysis of equation (B.1) assumes a log-log relationship among smoking intensity, price, and income. lnQid is observed if and only If the individual from a given decile d is a current smoker.

Several models were tested before deciding on the final elasticities used. All relied on the RLMS-HSE in 2010–16. Table B.1 considers the main equation using cross-sectional estimates and some that use the panel feature of the data. All the models were tested without controls and then adding demographic controls and year fixed effects. Among control variables included in the household level model were urban status, macroregion and year fixed effects. For the individual level cross-section and panel models, the controls included age, education, number of years smoked, urban status, macroregion, and year fixed effects.

**Table B.1 Regression Results, by Model**

|_Both_|<br>_1_|<br>_2_|<br>_3_|<br>_4_|<br>_5_|<br>_6_|<br>_7_|_8_|_9_|_10_|
|---|---|---|---|---|---|---|---|---|---|---|
|Cross-section (ind level)|-0.25|-0.23|-0.22|-0.21|-0.20|-0.21|-0.20|-0.20|-0.19|-0.19|
|Panel (RE)|-0.14|-0.13|-0.13|-0.12|-0.12|-0.12|-0.12|-0.12|-0.11|-0.11|
|Panel (FE)|-0.07|-0.06|-0.06|-0.05|-0.05|-0.05|-0.05|-0.05|-0.04|-0.04|
|Panel (HT)|0.01|0.05|0.05|0.03|-0.03|-0.11|0.01|0.01|0.04|0.06|
|Cross-section (HH level)|-0.68|-0.61|-0.58|-0.54|-0.52|-0.51|-0.49|-0.46|-0.45|-0.41|
|Common prices|-0.02|-0.03|-0.03|-0.03|-0.03|-0.03|-0.02|-0.02|-0.03|-0.02|
|_Men_|||||||||||
|Cross-section (ind level)|-0.22|-0.21|-0.20|-0.18|-0.17|-0.17|-0.17|-0.16|-0.16|-0.16|
|Panel (RE)|-0.13|-0.12|-0.12|-0.11|-0.10|-0.10|-0.10|-0.10|-0.10|-0.10|
|panel (FE)|-0.07|-0.06|-0.06|-0.05|-0.05|-0.05|-0.05|-0.04|-0.04|-0.04|
|_Women_|||||||||||
|Cross-section (ind level)|-0.33|-0.30|-0.27|-0.30|-0.31|-0.31|-0.31|-0.29|-0.29|-0.28|
|Panel (RE)|-0.17|-0.16|-0.14|-0.15|-0.15|-0.14|-0.14|-0.15|-0.14|-0.13|
|Panel (FE)|-0.07|-0.07|-0.04|-0.05|-0.05|-0.03|-0.04|-0.05|-0.03|-0.03|

_Source_ : Estimates based on Russia Longitudinal Monitoring Survey–HSE 2010–16.

_Note_ : Demographic controls are included on every model. For the HH level cross-sectional demographic controls include: urban status, macro region and also controls for year fixed effects. For the individual level cross-section and panel models: gender, age, education, , number of years smoked, urban status, macroregion, and year fixed effects.

The total expenditures were deflated using the consumer price index, while the prices for cigarettes were deflated using the average prices provided by the Russian Federal State Statistics Service, Rosstat. To adjust for spatial variation in prices, all monetary variables were spatially deflated using the fixed basket index provided by Rosstat.

The deciles were defined based on per capita total expenditures. The panel model was estimated in both specifications, with fixed and random individual effects. According to the Hausman test, the hypothesis of no correlation between individual random effects and other regressors should be rejected, and the model with random effects provides biased estimates.

Self-reported prices are potentially endogenous because the decision on the brand of cigarettes to buy is taken together with the decision on the quantity of smoking. A few techniques were used to try to address 18