The failure of plain packaging policy. Sinclair Davidson

The failure of plain packaging policy Sinclair Davidson

What is going on here? Nanny staters employ nirvana analysis: There can be a free lunch. People could be different. The grass will be greener. Tobacco control is an industry. Has same incentives as any non-profit / bureaucracy. Budget. Employment make work (be seen to be busy). Control. Tobacco Control industry is not about stopping smoking. Tobacco Control industry is subject to disruption from new technology. RMIT University 2017 Economics, Finance and Marketing 3

The Theory of Tobacco Control Medical Perspective: Smoking is single largest cause of premature death. Smoking should be treated as a disease and eradicated. Optimal level of smoking is zero. Economic Perspective: Smoking has an asymmetric information problem. Public education. Smoking has an externality problem. Pigouvian taxation. Optimal level of smoking is not zero. RMIT University 2017 Economics, Finance and Marketing 4

The Theory of Tobacco Control RMIT University 2017 Economics, Finance and Marketing 5

How Successful Is Nanny State Policy? Source: http://nannystateindex.org/analysis/ RMIT University 2017 Economics, Finance and Marketing 6

The Australian Experience (smoking rates 14+) Adapted from Australian Government: Department of Health, Tobacco key facts and figures RMIT University 2017 Economics, Finance and Marketing 7

Plain Packaging Objectives To improve public health by: discouraging people from taking up smoking, or using tobacco products. encouraging people to give up smoking, and to stop using tobacco products. discouraging people who have given up smoking, or who have stopped using tobacco products, from relapsing. reducing people s exposure to smoke from tobacco products. Mechanisms to achieve those objectives: reduce the appeal of tobacco products to consumers. increase the effectiveness of health warnings on the retail packaging of tobacco products. reduce the ability of the retail packaging of tobacco products to mislead consumers about the harmful effects of smoking or using tobacco products. RMIT University 2017 Economics, Finance and Marketing 8

Some actual evidence Youth smoking rates State based evidence RMIT University 2017 Economics, Finance and Marketing 9

Davidson and de Silva (2014) Ronald Coase famously argued that if you tortured the data long enough it would confess. In this paper we have tortured the data and it has not confessed. At best we can determine the plain packaging policy introduced in December 2012 has not reduced household expenditure of tobacco once we control for price effects, or the long-term decline of tobacco expenditure, or even the latent attributes of the data. To the contrary, we are able to find instances where household expenditure of tobacco has, ceteris paribus, increased. In our forecasting exercise the actual data comes close to breaking through the 80% confidence interval. While we do not want to over-emphasise these results, we do conclude that any evidence to suggest that the plain packaging policy has reduced household expenditure on tobacco is simply lacking. RMIT University 2017 Economics, Finance and Marketing 10

The Cancer Council Victoria Studies The federal government commissioned a A$3 million tracking survey to monitor the impact of plain packaging introduction. Results published in 2015 Tobacco Control. Other government funded survey studies published in same issue. Conclusions: Plain packaging in Australia has been a casebook example of effective tobacco control a policy measure driven by evidence, carefully designed and implemented, and now rigorously assessed. Hastings and Moodie (2015: ii2) These results should give confidence to countries considering plain packaging that plain packs not only reduce appeal of tobacco products and increase the effectiveness of health warnings but also diminish the tobacco industry s ability to use packs to mislead consumers about the harms of smoking. Melanie Wakefield RMIT University 2017 Economics, Finance and Marketing 11

But Problems: Data mining. Data snooping. Different data across studies. Different time periods. Different variables. Does not test actual quitting behaviour before and after the policy was introduced. Davidson and de Silva (2016). RMIT University 2017 Economics, Finance and Marketing 12

The Cancer Council Victoria Response In the face of criticism from Davidson and de Silva (2016) the Victorian Cancer Council now claims The NTPPS was quite explicitly not designed to assess quitting success or change in smoking prevalence but rather focussed on the immediate impact of the legislation on perceptions of the pack, effects of health warnings and understanding of product harmfulness. RMIT University 2017 Economics, Finance and Marketing 13

The Cancer Council Victoria Response In the face of criticism from Davidson and de Silva (2016) the Victorian Cancer Council claimed The NTPPS was quite explicitly not designed to assess quitting success or change in smoking prevalence but rather focussed on the immediate impact of the legislation on perceptions of the pack, effects of health warnings and understanding of product harmfulness. But The contract between the CCV and Australian government stipulated: d) a discussion of the overall impact of packaging changes on key proximal outcome measures and more distal outcome measures including quit intentions, quit attempts and consumption; and e) a discussion of the independent and combined influences of plain packaging, health warnings, mass media campaign exposure, and any tobacco pricing and product changes. RMIT University 2017 Economics, Finance and Marketing 14

independent and combined influences Source: http://www.tobaccoatlas.org/topic/warnings-packaging/ RMIT University 2017 Economics, Finance and Marketing 15

Davidson and de Silva (2017) Brennan et al. (2015) report: RMIT University 2017 Economics, Finance and Marketing 16

Davidson and de Silva (2017) Case proven? We can all go home? Not so fast Brennan et al. (2015) limit their analysis to the period after the introduction of plain packaging Davidson and de Silva (2017) replicate the Brennan et al. (2015) study looking at what happened both before and after the introduction of the plain packaging study. RMIT University 2017 Economics, Finance and Marketing 17

Davidson and de Silva (2017) Source: Davidson and de Silva (2017) RMIT University 2017 Economics, Finance and Marketing 18

Davidson and de Silva (2017) Source: Davidson and de Silva (2017) RMIT University 2017 Economics, Finance and Marketing 19

Davidson and de Silva (2017) Graphic health warnings did not become more effective after the introduction of plain packaging. Graphic health warnings were first introduced in 2006. The joint effect of plain packaging and health warnings did not contribute to actual quit attempts. Smokers did dislike packs No impact on quit attempts. Short lived. RMIT University 2017 Economics, Finance and Marketing 20

How to find me My Plain Packaging Resources page: http://catallaxyfiles.com/2016/04/01/plain-packaging-resources/ Google: Sinclair Davidson plain packaging resources Blog: www.catallaxyfiles.com Twitter: @sincdavidson Research Gate: https://www.researchgate.net/profile/sinclair_davidson SSRN: http://ssrn.com/author=290796 Institute of Public Affairs: http://ipa.org.au/people/sinclair-davidson Australian Broadcasting Corporation: http://www.abc.net.au/news/sinclairdavidson/31142 The Conversation: https://theconversation.com/profiles/sinclair-davidson- 1598/articles RMIT University 2017 Economics, Finance and Marketing 22