BACKGROUND: Lebanon has experienced a severe economic crisis since 2019, characterized by significant currency devaluation and widespread impoverishment. This study evaluates the impact of this crisis on cigarette demand elasticities in 2024 compared to 2019, focusing on local ("discount") and foreign ("premium") cigarette brands. Tobacco taxation remains a critical policy tool to reduce prevalence, especially among low-income and youth populations, yet the crisis's effects on price sensitivity remain underexplored.
METHODS: Data were collected through a nationally representative survey (n=2500) employing a volumetric choice experiment (VCE) to gauge stated purchase behavior under hypothetical price scenarios. Censored Poisson models were used to estimate own- and cross-price elasticities for and between local and foreign cigarette brands, accounting for a substantial proportion of non-smokers and zero purchases. Comparisons were made with 2019 elasticity estimates in Lebanon.
RESULTS: Contrary to expectations, overall own-price elasticities for both local and foreign cigarettes remained relatively stable despite the economic downturn. In 2024, demand for local cigarettes was inelastic (-0.770), while demand for foreign cigarettes was elastic (-1.356). In comparison, elasticities in 2019 were found to be slightly but insignificantly smaller in magnitude at -1.157 and -0.639, respectively. Substitution effects were modest but significant, with cross-price elasticities indicating a stronger substitution response when foreign cigarette prices rose. Notably, the overall relative stability of cigarette price elasticities suggests resilience of demand for foreign and local cigarette brands.
CONCLUSIONS: The findings challenge conventional assumptions that economic crises substantially amplify price sensitivity, underscoring the importance of tailored tax policies. While higher taxes on both cigarette categories could effectively reduce consumption, the resilience of cigarette demand highlights the need for complementary measures, such as targeted awareness campaigns and youth-focused interventions. These results provide critical insights for modeling the potential outcomes of future tax policies in Lebanon and similar low- and middle-income settings.