OVERVIEW

Aim: To estimate the price elasticity of demand for cigarettes and alcohol in Ecuador, using cross-sectional data from the national survey of income and expenditure of urban and rural families (ENIGHUR) 2011-2012.

Methods: 2011-2012 data were used ENIGHUR. Applied the methodology developed by Deaton (1, 2) to estimate the price elasticity of demand for cigarettes and alcohol, with information on costs and quantities. In addition, the socio-economic variables of households were included.

Results: The price elasticity of the demand for cigarettes is 0.87. This means that, if prices rise 10%, consumption could decrease 8.7%. Results of the cross price elasticities of demand for alcohol cigarette show the expected signal, i.e. negative, which would indicate that they are complementary goods; However, they are not significant statistically. In addition, we find that the price elasticity of demand for alcohol is-0.44, so a 10% increase in the price of alcohol would lead to a reduction in your consumption of 4.4%.

Conclusions: A policy of price increase, for example, with a tax increase applied to cigarettes and alcohol, could have a positive effect on public health, reducing the consumption of both goods. However, this measure would not be sufficient to reduce the gaps in measures of prevalence and health outcomes between gender and other population groups, taking into account the difference in sensitivity of consumption to price changes.