Estimation of the demand for cigarettes in Uruguay: an analysis based on household income and expenditure surveys

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ID: 315462
2026
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Ranked #113 of 122 articles by views in nicotine & tobacco research : official journal of the society for research on nicotine and tobacco

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Abstract
INTRODUCTION: This study estimates the demand for cigarettes in Uruguay, capturing total consumption (including both legal and illicit products)de, providing price and expenditure elasticity estimates at the aggregate level and across household expenditure groups. METHODS: Using data from the most recent National Household Expenditure and Income Survey (2016-2017), we apply the Almost Ideal Demand System (AIDS) method, which takes advantage of the spatial variation of prices as an instrument to correct potential endogeneity problems, and incorporate a Heckman selection correction to account for zero consumption. RESULTS: Our findings indicate that cigarette demand in Uruguay is inelastic in the conventional economic sense, with an estimated price elasticity of -0.639. The estimated expenditure elasticity is 0.107, suggesting that cigarette consumption increases modestly with household expenditure. We find substantial heterogeneity across socioeconomic groups: households in the lowest expenditure tertile exhibit a much higher price responsiveness, with an elasticity of -1.391, while estimates for higher tertiles are smaller and imprecisely estimated. These results imply that tax-induced price increases are likely to reduce overall cigarette consumption, with stronger behavioral responses among lower-expenditure households. CONCLUSIONS: These findings support tobacco taxation as an effective public health tool and indicate stronger behavioral responses among lower-expenditure households. While a full welfare assessment is beyond the scope of this study, the results are consistent with the potential for progressive health effects. More broadly, the evidence underscores the importance of well-designed tax policy within comprehensive tobacco control strategies in middle-income countries.
Reference Key
openalex_W7163027750 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors Mariana Gerstenblüth, Cecilia González, Patricia Triunfo
Journal nicotine & tobacco research : official journal of the society for research on nicotine and tobacco
Year 2026
DOI
10.1093/ntr/ntag127
URL
https://doi.org/10.1093/ntr/ntag127
Keywords Keywords not found

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