Does Plain Packaging Regulation Reduce Smoking?

Here are some excerpts from a paper which casts doubt on the idea that plain packaging regulation, by itself anyway, reduces smoking:

... we contribute to the existing empirical literature in three ways. First, we use a difference-in-differences (DiD) research design to evaluate the effect of plain packaging. Using data from New Zealand as the control, we control for the confounding factors (such as changes in societal attitudes towards smoking or the lagged effects of other smoking policies) that were not explored in previous studies. Second, we analyse data from a longer post-implementation time period than in previous studies to assess the lagged effects of plain packaging (the existing literature was limited to fewer post-implementation years given the available data at the time of their studies). Last, we add outcome measures of smoking expenditure, smoking expenditure intensity, and smoking quantity in addition to smoking prevalence (which is the only outcome that has been examined in previous studies). ...

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We find that the plain packaging policy in Australia did not significantly affect smoking prevalence, although it significantly reduced HTCE [household tobacco consumption expenditure] and HTCI [household tobacco consumption intensity], and significantly increased the quantity of tobacco consumed per week. The findings are largely robust to different specifications of the regression model and to data collected from different control countries ... The findings also suggest that, in response to the plain packaging policy, smokers substituted cheaper cigarettes for more expensive ones. Such substitution reduced both the expenditure and intensity of tobacco consumption. However, because smoking became less costly, smokers consumed more cigarettes.

It is important to note that the effect we find is a combination of the introduction of plain packaging and the increase in space allocated to health warnings on tobacco products, which was legislated at the same time. Consequently, we should be careful about exclusively attributing the effects we find to plain packaging. However, for the substitution effect that we discuss in this article, we propose that the simultaneous change in the size of health warnings is not a concern. Both plain packaging and larger-sized health warnings reduce the ability of tobacco companies to use the package to differentiate their product. However, conceptually, the plain packaging policy is likely to result in substitution from expensive to cheap cigarettes, as both expensive and cheap cigarettes are packaged identically, and this encourages consumers to focus on price. By contrast, the increase in the size of health warnings applies across the range of tobacco products and is therefore unlikely to create a substitution effect to ‘healthier’ tobacco products.

If the change in the size of health warnings had not gone ahead, the resulting vacant package space would have become plain instead, with probably similar effects in terms of substitution. Consequently, it is unlikely that the simultaneous introduction of larger health warnings interferes with the effectiveness of the TPP Act in terms of the substitution effect. Future research in countries in which plain packaging is introduced separately from other measures is needed to confirm this.

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The empirical results from the DiD analysis have important policy implications. The effects of the policy are intended to grow over time, by lowering smoking initiation rates, increasing cessation attempts and reducing relapses. These expected benefits should be realised with a reduction in smoking prevalence and quantity of tobacco consumed, and both of these measurements have declined from their pre-TPP-Act levels (2012). However, we find that the introduction of the plain packaging policy did not reduce smoking prevalence or tobacco consumption in Australia beyond current trends. On the contrary, compared with New Zealand and controlling for a set of confounding factors, the number of cigarettes purchased (consumed) per current smoker increased and this is attributable to the TPP Act. This seems to be a result of the substitution effect, with the removal of brand loyalty driving consumers to purchase a larger quantity of cheaper tobacco products.

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The number of countries that have or are planning to implement plain tobacco packaging has increased recently. Global debate has also recently been sparked about the potential use of plain packaging for products other than tobacco, such as alcohol, added sugar foods and fast foods, all of which pose a threat to public health. Although it is impossible to predict how this policy would affect other consumer goods, the findings of this study would suggest that auxiliary measures to prevent consumers from substitution are important for a plain packaging policy to achieve its intended outcomes.

I'm sure there will be additional studies coming soon, but what are the implications if plain packaging does not, in fact, reducing smoking rates? Will there be additional WTO and investment litigation related to particular countries' laws and regulations? At the least, you might expect a discussion about all this in the TBT Committee.