# **2. Literature review**

Stefler et al. (2018) estimate that the population share associated with smoking among cancer deaths in Russia was 25 percent.<sup>4</sup> Close to 300,000 Russians died because of tobacco-related illnesses (GBD 2016). A 2002 study by WHO suggests that tobacco-related diseases may shorten the healthy years of life by 13.6 years<sup>5</sup> (Mathers et al. 2002). This has negative consequences on human capital development and imposes a growing economic burden because smoking decreases earnings potential and labor productivity.

Several studies have quantified the economic cost of smoking, though most have been carried out in high-income western countries (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 gross domestic product (GDP) (US$1.85 trillion in purchasing power parity U.S. dollars). According to these authors, upper-middle-income countries, such as Russia, experience almost a third of this burden.<sup>6</sup> Estimates for the economic burden in the case of Russia vary between US$8 billion and US$17 billion (Potapchik and Popovich 2014; Goodchild, Nargis, and Tursan d’Espaignet 2018).

Tobacco price increases are also associated with expansion in productive life years. Verguet et al. (2015) analyze the health effects of 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, Pichón-Riviere 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. For Russia, Maslennikova et al. (2013) estimate that, if taxes were raised to 70 percent of the retail price, along with other policies, such as banning smoking in public places, 3.7 million tobacco-related deaths would be averted, although this may be a low prediction because secondhand smoking effects were not taken into account. According to the WHO, secondhand smoke is responsible for over 890,000 premature deaths a year (WHO 2017a).

Tobacco taxation has been recognized as one of the most effective tobacco control strategies. In highincome 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. Maslennikova et al. (2013) estimate that a 10 percent rise in price would reduce cigarette consumption among people under 35 by 3 percent and among people over 35 by 1 percent. This may be because price elasticities for tobacco products are higher among young people. Lance et al. (2004) use data from three waves of the Russia Longitudinal Monitoring Survey–Higher School of Economics (RLMS-HSE) (1996, 1998, and 2000) to estimate the demand for cigarettes among men and find that the price elasticity of smoking participation was between –0.106 and –0.050. However, young people (ages 13–19) were found to be much more price sensitive; the total

> 4 <mark>‐ Randomly selected participants living in mid size towns in Belarus, Hungary, and Russia provided information on smoking habits, alcohol consumption, vital statistics, and cause of death (if applicable) of male relatives (fathers, siblings, and partners). The population attributable risk (PAR) fraction of cancer deaths (ages 35–79) because of smoking, alcohol consumption, or both was estimated between 2001 and 2013. Among 72,190 men, 4,702 died of cancer.</mark>

> 5 This number might be overestimated due to alcohol abuse effect. Some twenty years ago the number of life years lost was estimated as 5-7 years (Gerasimenko, 2001).

> 6 Goodchild, Nargis, and Tursan d’Espaignet (2018) estimate the economic cost of smoking-attributable diseases at US$354 billion in upper-middle-income countries (purchasing power parity U.S. dollars).

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