Nicotine &Nicotine

Tobacco&Research
Tobacco Research Advance Access published March 4, 2013

Original Investigation

Cigarette Affordability in the UnitedStates

PritiBandi MS1,2, EvanBlecher PhD1, VilmaCokkinides PhD1, HanaRoss PhD1, AhmedinJemal PhD1
1Intramural Research Department, American Cancer Society, Atlanta, GA; 2Department of Nutrition, Food Studies, and Public
Health, New York University, New York, NY

Corresponding Author: Priti Bandi, M.S., Department of Nutrition, Food Studies, and Public Health, New York University, 411
Lafayette Street, 5th floor, New York, NY 10003, USA. Telephone: 646-820-9458; Fax: 212-995-4194; E-mail: pb1349@nyu.edu
Received September 13, 2012; accepted December 26, 2012

Abstract
Introduction: Cigarette excise tax and price increases reduce smoking consumption and prevalence. Studies have previously
defined cigarette affordability internationally and have discussed its relevance as a tobacco control policy measure. This study
provides the first estimates on cigarette affordability in the United States.

Results: In 2010, on average, it took 1.62% of an individuals annual personal disposable income to purchase 100 packs of cigarettes in a U.S.state (relative income price). An individual who earned the equivalent of the hourly median wage in a U.S.state
needed to work 21.4min in an hour to purchase a pack of cigarettes (minutes of labor, MoL50), whereas a relatively poorer
individual earning the hourly 25th percentile wage needed to work 32.7min (MoL25). Cigarettes were most affordable in parts
of the South and West and were least affordable in Northeastern states. While cigarette prices increased significantly between
1970 and 2008, affordability remained unchanged during this time and cigarettes may have become more affordable since the
early 2000s in many states.
Conclusions: Cigarette affordability in 2010 varied widely across U.S.states, a result of cigarette price increases not keeping
pace with income increases in some parts of the United States, especially in Southern and Western states. In order to maximize
the public health gains from cigarette tax increases, state taxation policies may consider affordability in benchmarking excise
tax increases.

Introduction
Increasing cigarette excise taxes and prices reduces smoking rates by preventing smoking initiation in youth, promoting cessation among smokers, and reducing consumption in
continuing smokers (Chaloupka, Straif, & Leon, 2011). As a
result, increasing cigarette excise taxes has been accepted as
one of the most effective tobacco control policies worldwide
(Chaloupka, Yurekli, & Fong, 2012; International Agency
for Research on Cancer, 2011). In the United States, tobacco
taxation is excised at three levels: state, federal, and local
(Campaign for Tobacco-Free Kids, 2011b). While the federal
excise tax is uniform across the country, state taxes vary substantially as do local (municipal and county) taxes (Campaign
for Tobacco-Free Kids, 2011b). This variability is a major
reason for state differences in cigarette prices and, therefore,
contributes to the variation in state-level smoking consumption
and prevalence. Previous studies have reported that progress
in reducing smoking and smoking-related diseases is larger in
those states with aggressive tobacco control policies, including
in those that have significantly increased cigarette excise taxes

(Fichtenberg & Glantz, 2000; Pierce, Messer, White, Kealey, &

Cowling, 2010; Polednak, 2009, 2010).
While cigarette price conveys how expensive the product is,
it does not measure individuals ability to purchase cigarettes.
Several studies over the past decade have developed the
concept of cigarette affordability as a function of cigarette
price and individuals income level (Blecher, Ross, & Leon,
2012; Blecher & van Walbeek, 2004, 2009; Bogdanovica,
Murray, McNeill, & Britton, 2012; Guindon, Tobin, & Yach,
2002; Kan, 2007) In a more recent series of studies, Blecher
etal. (2012) have shown the relevance of cigarette affordability
in low- and middle-income countries whose economies have
experienced rapid economic growth (Blecher, 2010; Blecher &
van Walbeek, 2009). However, no previous study has examined
cigarette affordability in the United States despite substantial
state variation in cigarette prices and incomes as well as their
trends over time (Bernstein, McNichol, & Nicholas, 2008;
Campaign for Tobacco-Free Kids, 2011b).
In this study, data on cigarette prices and income were used
to calculate one broad and two narrow measures of cigarette
affordability at the national and state levels annually between

doi:10.1093/ntr/nts348
The Author 2013. Published by Oxford University Press on behalf of the Society for Research on Nicotine and Tobacco.
All rights reserved. For permissions, please e-mail: journals.permissions@oup.com

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Methods: Cigarette affordability was defined as cigarette price in relation to individuals income level. Three measures of
cigarette affordability were estimated for U.S.states and nationally between 1970 and 2010.

Cigarette Affordability in the U.S.

1970 and 2010. Geographic patterns and trends in affordability
are described vis--vis cigarette price during this time. The public health relevance of cigarette affordability is discussed with
regard to state-level tobacco taxation and tobacco control policy.

Methods

Occupational Employment Statistics (OES) surveys between

2001 and 2010 (Bureau of Labor Statistics, 2011). Two wage
measures were used: (1) hourly median wages for all occupations and (2) hourly 25th percentile wages for all occupations.
All occupational categories were based on over the 800 classified occupations in the Standard Occupation Classification in
2000 and 2010 (Bureau of Labor Statistics, 2011).
Statistical Analysis

Affordability
Three measures of affordability were defined based on one
broad measure of income and two narrow measures of income
for each U.S.state and the District of Columbia (DC) in each
year. Relative income price (RIP) was defined as the percentage of the state per capita personal disposable income needed
to purchase 100 packs of cigarettes. The RIP was adapted to
the U.S.state context from the RIP defined by Blecher and van
Walbeek (2004) who used per capita gross domestic product as
the measure of income to define country level affordability. The
higher this percentage, the less affordable cigarettes are and vice
versa. Minutes of labor (MoL) was defined as the minutes of
labor needed to purchase a pack of cigarettes by an individual
who earns the equivalent of the state hourly median (50th percentile) wage (MoL50) and the hourly 25th percentile wage
(MoL25) across all occupations in a particular year. The MoL50
measure was based on a measure originally defined by Guindon
etal. (2002) as price divided by the net hourly wage in a crosssection of 12 occupations. The MoL25 was adapted based on
separate but similar definition by Kan (2007) and minimizes the
distortive effect of income inequality and provides a measure of
affordability in individuals who are poorer than average. The
MoL50 and MoL25 in this study are further refinements over
previous definitions as they use wage percentiles (50th and 25th)
instead of average wages and they consider wages in all occupations instead of in a cross-section of occupations.

2010 Analysis
National estimates of annual (calendar year) price, tax, state and
federal tax as a percentage of price, and affordability measures
(RIP, MoL50, MoL25) in 2010 were calculated as populationweighted averages across the 50 states and DC. The 10th and 90th
percentiles were used to present the range across states, and were
defined as the values in the state distribution below which 10%
and 90% of the states lie. The coefficient of variation was calculated in order to compare the variability in each of the measures
across U.S.states. It is defined as the ratio of the standard deviation to the mean and is independent of the units of measurement
making comparisons of variability between measures possible.

Cigarette Tax andPrice

Data on state cigarette tax, price, and state and federal excise tax
as a percentage of price were from the Tax Burden on Tobacco,
an annual report that provides a historical compilation of excise
tax and retail price data for all cigarette brands, including
generic brands (Orzechowski & Walker, 2010). Retail price data
were calculated such that full-priced brands and generic brands
were weighted by market share (Orzechowski & Walker, 2010).
For the purpose of trend analyses of cigarette prices, nominal
values of cigarette price were converted to real terms, that is,
adjusted for inflation using the Consumer Price Index for All
Urban Consumers (CPI-U, U.S.city average) with 2010 as the
base year (2010=100) (Bureau of Labor Statistics, 2012).
Income
Personal disposable income was used as the broad state-level
income measure (Bureau of Economic Analysis & Regional
Measurements Division, 2011). Personal disposable income is
a measure of the amount available to residents in each state for
saving or spending during the calendar year and is computed as
the income received from all sources less personal tax and nontax payments. Annual personal disposable income was divided
by midyear population estimates from the Census Bureau
to estimate per capita personal disposable income. Narrow
income measures were estimates of hourly wages from annual

Page 2 of 8

Trends
Trend analyses of affordability were conducted for RIP alone as
the hourly wage estimates from the OES surveys on which the
MoL measures were based were only available from 2001 onward.
Trend analyses were restricted to the time period between 1970
and 2008 because (a) not all states taxed cigarettes until 1970
and (b) to avoid the sudden fluctuation in trends as a result of the
increase in federal excise tax rate in 2009 due to the passage of
the Childrens Health Insurance Program Reauthorization Act.
In order to study differential trends over time nationally and for
each of the 50 states and DC, we applied Joinpoint Regression,
a statistical method that analyzes nonlinear, piecewise trends of
time-series data (Statistical Research and Applications Branch).
To estimate short-term trends within the entire period of study,
this program was used to fit a series of joined straight lines on
a log scale to real price, personal disposable income, and RIP
time-series data. Each joinpoint represented a statistically
significant (p < .05) change in trend. A maximum of three
joinpoints or four line segments were allowed, which represented
trends in varying time intervals. An annual percent change
(APC) was used to describe the trend or slope for each line
segment. APCs that were significantly different from zero (twosided t test at p < .05) were described with the terms increased
or decreased and nonsignificant trends were described with
nonsignificant increase, nonsignificant decrease, stable, or
level. Long-term trends over the entire time period of study
(19702008) were estimated as the annual average percent
changes (AAPCs) and were estimated as the weighted average
of the APCs, within this interval, with the weights equal to the
length of the APC interval. Since the standard errors of the
price and affordability measures were unavailable, constant
heteroscedasticity of errors was assumed over time.

Results
Summary statistics of cigarette tax, price, and affordability in
the U.S. states in 2010 are given in Supplementary Table 1.
The average population-weighted price of a pack of cigarettes

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Data Sources and Variables

Nicotine & Tobacco Research

across the 50U.S.states and DC in 2010 was $5.86. Forty-one
percent of the retail pack price was comprised by state ($1.47)
and federal excise taxes ($1.01). The RIP measure of affordability indicated that it took 1.62% of a U.S.state residents personal disposable income to purchase 100 packs of cigarettes.
The MoL affordability measures indicate that an individual
in the 50th percentile of the hourly wage distribution for all
occupations in a U.S.state had to work 21.4min in 1hr to purchase a pack of cigarettes (MoL50), whereas an individual in
the 25th percentile needed to work 32.7min to purchase a pack
of cigarettes (MoL25). The coefficient of variation, indicating
the variability across states, was the highest for state excise tax
rates (0.70) and was markedly lower for price (0.22), state and
federal tax as a percentage of price (0.19), and affordability
(RIP: 0.16, MoL50: 0.16, Mol25: 0.17).
Geographic Distribution in2010

Trends
U.S.Trends
Figure 2 shows trends in annual population-weighted states
average of the real price of a pack of cigarettes and the RIP
between 1970 and 2008. Over the entire study period between
1970 and 2008, cigarette prices increased significantly at an
annual rate of 1.9% (AAPC: 1.9%, 95% CI: 0.6%, 3.3%).
Since income increased at a similar rate, cigarette affordability
remained unchanged during this time (AAPC: 0.3%, 95%
CI: 95% CI: 0.9%, 1.5%). Short-term trends showed that
average cigarette price declined significantly between 1970
and 1980 (APC: 2.0%, 95% CI: 3.2%, 0.7%). However,
continuing a long-term historical trend of rising income levels,
incomes increased rapidly between 1970 and 1973 followed
by a more stable increase between 1973 and 1981. As a result,
cigarettes became rapidly more affordable between 1970
and 1979 (APC: 3.9%, 95% CI: 5.1%, 2.6%). Between
1980 and 1998, cigarette prices increased significantly at an
annual rate of 3% (95% CI: 2.4%, 3.6%). Combined with a
steady increase in incomes between 1981 and 2008, cigarettes
became less affordable between 1979 and 1998 (APC: 1.4%,
95% CI: 0.9%, 1.8%). Coinciding with the Master Settlement
Agreement (MSA), there was a nonsignificant rapid increase in
price between 1998 and 2001 (APC: 13.6%, 95% CI: 3.4%,
33.6%), which was reflected in a similar but lower magnitude
increase in affordability (APC: 11.3%, 95% CI: 3.5%, 28.4%).
From 2001 to 2008, a stable price trend (APC: 0.02%, 95%
CI: 2.1%, 2.2%) combined with increasing income resulted
in cigarettes becoming nonsignificantly more affordable (APC:
1.4%, 95% CI: 3.3%, 0.5%).
Regional and State-LevelTrends
Averaged U.S.trends, however, mask significant regional and
state-level variation in price, income, and affordability trends.
Figure2 shows trends in the range of price and affordability
annually, using the 90th and 10th percentiles. In order to show
the variation in short-term trends between census regions and
states, Table1 presents trends (APCs & AAPCs) in affordability (RIP) in U.S.states categorized by region. Also, each panel

Figure1. Geographic distribution of cigarette price and affordability (relative income price [RIP] and minutes of labor
[MoL50]), U.S.states, 2010. aPercentage of per capita personal disposable income required to buy 100 packs of cigarettes.
bMoL needed to buy a pack of cigarettes by an individual who earns the equivalent of the state median (50th percentile wage).

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Low cigarette price, state tax, and tax as a percentage of price

were concentrated in the Southeastern United States (East South
Central and Mid-Atlantic regions), whereas high levels were
concentrated in the Northeastern United States (Figure1 and
Supplementary Table1). State excise tax and retail price were
positively and significantly correlated (Spearmans rank correlation coefficient: 0.98, p < .001); retail price and state excise
tax were highest in New York ($9.65 and $4.35, respectively)
and lowest in Missouri ($4.10 and $0.17, respectively). State
and federal tax as a percentage of price was highest in Rhode
Island (57.3%) and lowest in Virginia (28.4%). Overall, lower
(bottom and second quartiles) levels of price and affordability
were concentrated in Southern and Western states. However,
unlike price, there was further variability in affordability within
U.S. regions. For example, prices in the bottommost quartile
were concentrated in the entire Southeastern United States
(East South Central and South Atlantic). However, affordability levels in the bottommost quartile were concentrated only
in the South Atlantic region, whereas states in the East South
Central region were in the second quartile for affordability
(RIP and MoL). While prices in parts of the West (Mountain
and Pacific) and West North Central were in the second quartile
of the price distribution, they were in the bottommost quartile of affordability. Based on the RIP affordability measure,
cigarettes were least affordable in New York (2.31%) and most
affordable in North Dakota (1.12%). Based on the MoL50
measure, cigarettes were least affordable in New York (31min)

and most affordable in DC (14.9min) and Virginia (16.1min).

Based on the MoL25 measure, cigarettes were least affordable
in New York (49.1min) and most affordable in DC (24.7min)
and Missouri (24.9min).

Cigarette Affordability in the U.S.

in Supplementary Figure1 shows affordability trends in states

that had the lowest, median, and the highest AAPC between
1970 and 2008, in each of the four U.S.census regions.
Between 1970 and the late 1970s, cigarettes became significantly more affordable at a faster rate for the 90th percentile (19701978 APC: 5.3%, 95% CI: 6.9%, 3.8%) of
states, whereas the 10th percentile of states showed a slower
rate of change (19701979 APC: 2.8%, 95% CI: 4.1%,
1.5%). This indicates that cigarettes became more affordable in states where cigarettes were less affordable to begin
with. For example, the majority of Southern states, which had
higher than average affordability levels in 1970, experienced
the most rapid declines followed by Western (Mountain)
states. Northeastern and Western (Pacific) states experienced
smaller declines than Southern states. This trend was primarily because even though cigarette prices decreased at approximately the same rate in most regions, income levels increased
at a higher rate in most Southern states than in other regions
of the country.
APCs of affordability trends between the late 1970s and the
late 1990s showed the same significant increase for the mean,
10th (19791997 APC: 1.2%, 95% CI: 0.7%, 1.8%) and 90th
percentiles (19781997 APC: 1.2%, 95% CI: 0.7%, 1.7%) of
U.S.states which indicated less variability in price and income
trends across U.S.states. The exception to this lack of regional
variation in affordability during this time was in Southern
states, which showed little or no change in affordability during
this time period, primarily because cigarette prices on average

Page 4 of 8

increased at approximately the same rate as income levels

(Supplementary Figure1).
Coincident with the MSA, cigarette prices rose sharply in
most states beginning in 1997 until the early 2000s. As a result,
cigarettes became less affordable in most states at an annual
rate of between 6% and 16%. While there were no clear geographic patterns, the majority of states with an APC greater than
the median increase of 10% were Southern states in the South
Atlantic and the East South Central and Northeastern states.
On the other hand, in the time period between 2000 and
2008, cigarettes became nonsignificantly more affordable in
the 10th percentile of states where cigarettes were already
more affordable than average (APC: 1.4%, 95% CI: 3.0%,
0.3%). Whereas the 90th percentile of states (APC: 0.9%, 95%
CI: 0.8%, 2.6%) showed a nonsignificant increase. Therefore,
except for California, New York, Missouri, and Nebraska, the
majority of the states where cigarettes became significantly
more affordable during this time were Southern states, which
already have less than average affordability levels (Table1).

Discussion
This is the first study to estimate cigarette affordability in the
U.S. In 2010, smokers needed to spend about 1.62% of their
annual personal disposable income to purchase 100 packs of
cigarettes. Amedian-waged smoker needed to work 21.4min
in 1hr to purchase one pack of cigarettes, whereas a relatively

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Figure2. Trends in cigarette price and affordability (relative income price [RIP]), U.S.state average, 10th and 90th percentiles,
19702008. Note: Annual percent change (APC) is statistically significantly different from zero using a two-sided t test (p<.05).
aPercentage of per capita personal disposable income required to buy 100 packs of cigarettes.

Midwest

West North Central

East North Central

Mid-Atlantic

U.S.states population weighted average

Northeast
New England
Connecticut
Maine
Massachusetts
New Hampshire
Rhode Island
Vermont
New Jersey
New York
Pennsylvania
Illinois
Indiana
Michigan
Ohio
Wisconsin
Iowa
Kansas
Minnesota
Missouri
Nebraska
North Dakota
South Dakota

19701978
19701979
19701979
19701982
19701980
19701981
19701979
19701980
19701980
19701979
19701978
19701974
19701979
19701979
19701979
19701979
19701978
19701980
19701978
19701978
19701973
19701974

Years
3.9*
4.3*
3.8*
2.8*
3.7*
3.0*
3.9*
3.3*
3.3*
5.0*
4.6*
6.0
3.8*
3.8*
3.5*
4.6*
4.4*
4.4*
3.9*
3.6*
18.4*
10.8*

APC (%)
19781998
19791997
19791997
19821995
19801997
19811997
19791997
19801997
19801998
19791998
19781997
19741997
19791997
19791998
19791998
19791991
19781998
19801992
19781997
19781997
19732002
19742008

Years
1.4*
0.3
1.4*
1.0*
1.0*
2.0*
1.3*
0.7*
1.8*
0.7*
1.6*
0.7*
2.5*
0.8*
1.7*
3.4*
1.3*
3.3*
0.6*
1.1*
2.0*
1.3*

APC (%)

Trend 2

19982001
19972003
19972000
19952002
19972000
19972004
19972002
19972003
19982002
19982002
19972002
19972002
19972004
19982001
19982001
19911995
19982002
19921996
19972000
19972002
20022008

11.3
7.7*
10.7
6.8*
11.6
7.5*
7.5*
11.0*
16.1*
12.3*
7.8*
9.0*
6.5*
13.4
8.4
2.9
9.3
3.4
11.8
7.1*
4.7*

APC (%)

Trend 3
Years

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Region/state

Trend 1

Table1. Trends in Cigarette Affordability (RIP)a From Joinpoint Regressionb, U.S. States, 19702008

20012008
20032008
20002008
20022008
20002008
20042008
20022008
20032008
20022008
20022008
20022008
20022008
20042008
20012008
20012008
19952008
20022008
19962008
20002008
20022008

Years

1.4
1.7
1.6
1.4
1.0
2.9
0.5
1.8
3.7*
2.0
0.2
0.9
0.3
1.5
1.4
2.4*
2.7
2.7*
2.0*
4.5*

APC (%)

Trend 4

(Continued)

0.3
0.0
0.9
0.4
0.1
1.0*
0.7
0.8*
0.9
0.1
0.7
0.7
1.4*
0.8
0.4
0.4
0.2
0.3
0.1
0.1
0.8
0.1

AAPCc (%)

Trend (19702008)

Nicotine & Tobacco Research

Page 5 of 8

Pacific

Mountain

Delaware
District of Columbia
Florida
Georgia
Maryland
North Carolina
South Carolina
Virginia
West Virginia
Alabama
Kentucky
Mississippi
Tennessee
Arkansas
Louisiana
Oklahoma
Texas
Arizona
Colorado
Idaho
Montana
Nevada
New Mexico
Utah
Wyoming
Alaska
California
Hawaii
Oregon
Washington

19701980
19701972
19701980
19701979
19701982
19701974
19701976
19701979
19701975
19701977
19701976
19701976
19701976
19701978
19701978
19701981
19701981
19701980
19701981
19701975
19701980
19701980
19701979
19701978
19701980
19701977
19701980
19701979
19701980
19701979

3.1*
8.2
3.4*
3.6*
2.3*
7.1*
5.2*
3.6*
6.3*
5.8*
5.8*
5.0*
6.5*
5.4*
5.1*
4.0*
5.3*
3.1*
3.0*
5.3*
3.8*
3.6*
4.9*
4.1*
5.0*
9.5*
3.1*
1.2
2.8*
4.6*

APC (%)
19801997
19721997
19801997
19791997
19821997
19741997
19761997
19791998
19751997
19771997
19761997
19761997
19761997
19781997
19781997
19811991
19811991
19801994
19811989
19752008
19801991
19801990
19791997
19782003
19801985
19771996
19801998
19791997
19801983
19792005

Years
0.4
0.9*
0.4
0.3
1.8*
0.4*
0.1
1.5*
0.0
0.1
1.0*
0.1
0.5*
0.6*
0.8
4.3*
4.3*
2.0*
4.4*
1.7*
4.0*
5.4*
1.3*
2.5*
6.8
4.3*
2.6*
2.6*
10.0
2.8*

APC (%)

Trend 2
APC (%)
10.9
9.2
8.3
12.9
13.2
13.7
10.9*
10.1
10.5
10.1*
10.0*
7.8
12.6
9.1*
8.6
4.9
4.4
5.9*
1.8

7.3
3.8
6.5*
3.2
1.9*
13
10.8
13.7
2.1*
2.9

Years
19972000
19972000
19972001
19972000
19972000
19972000
19972001
19982001
19972000
19972001
19972001
19972001
19972000
19972001
19972001
19911994
19911994
19942000
19891995

19911994
19901994
19972003
20032008
19852004
19961999
19982001
19972000
19832008
20052008

Trend 3

20002008
20002008
20012008
20002008
20002008
20002008
20012008
20012008
20002008
20012008
20012008
20012008
20002008
20012008
20012008
19942008
19942008
20002008
19952008

19942008
19942008
20032008

20042008
19992008
20012008
20002008

Years
0.3
3.8*
3.9*
0.5
0.8
1.0
3.2*
2.1
0.7
2.5*
1.3
3.5*
0.9
2.9*
4.4*
2.6*
1.8*
0.8
3.1*

5.0*
2.3*
3.8

5.3
0.9
4.1*
0.6

APC (%)

Trend 4

0.2
0.0
0.6
0.2
0.8
0.3
0.3
0.2
0.2
0.6
0.3
0.6
0.6
0.5
0.6
0.5
0.2
1.0*
0.8
0.7
1.3
0.8
0.1
0.3
0.1
1.5
0.4
1.9*
1.4
0.6

AAPCc (%)

Trend (19702008)

Note. Annual percent change (APC) is statistically significantly different from zero using a two-sided t test (p < .05). Annual average percent change (AAPC) is statistically significantly different
from zero using a two-sided Z test (p < .05).
aRIP: relative income price is the percentage of annual per capita personal disposable income required to buy 100 packs of cigarettes.
bJoinpoint Regression Program (version 3.5.2, October 2011; Surveillance Research Program, National Cancer Institute, Bethesda, MD) was used to estimate trends (APC and AAPC) and include up
to three joinpoints, that is, four trend segments (Trends 14).
cThe AAPC is a weighted average of the APCs from the joinpoint regression.
*p < .05.

West

West South Central

East South Central

South Atlantic

Years

Trend 1

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South

Region/state

Table 1.Continued

Cigarette Affordability in the U.S.

Nicotine & Tobacco Research

of tobacco products (Eriksen, Ross, & Mackay, 2012; World
Health Organization, 2008). A state-level affordability benchmark wherein cigarette tax increases in a state are benchmarked
against its own economic level and growth may address problems with benchmarking against tax as a percentage ofprice.
The findings of this study are subject to limitations.
Affordability in this study was calculated from price data
that do not account for industry pricing mechanisms such
as price discounts, consumer tax avoidance behaviors, and
smuggling that might vary between states (Harding, Leibtag,
& Lovenheim, 2012; Lillard & Sfekas, 2010; Lovenheim,
2007). Additionally, aggregate state-level measures of affordability ignore the potential heterogeneity in cigarette taxes and
prices within states. Local tax structures, consumer tax avoidance behaviors based on socioeconomic status and geographic
location within the state, and availability of tax-free cigarettes
on Indian reservations are some of the factors that might contribute to within-state differentials in cigarette prices (Chiou
& Muehlegger, 2008; van Walbeek, Blecher, Gilmore, &
Ross, 2012). These factors minimize the public health impact
of tax increases by reducing the final price paid by smokers.
However, little is known about the extent to which these factors
differ within and between states, and over time. There is some
evidence that tobacco companies indulge in price discrimination by state based on market share (Keeler, Hu, Barnett,
Manning, & Sung, 1996) and consumer tax avoidance behaviors after tax increases differ based on their geographic location
within a state and proximity to lower-tax state borders (Chiou
& Muehlegger, 2008). With respect to between-state variations, this study found that states variation in excise taxes (0.7)
was nearly 3 times the variation in prices (0.22). Even after
considering nontax factors that might minimize price differentials between states, such as state manufacturer invoice price
and minimum price laws and their attendant effects (Centers
for Disease Control and Prevention, 2010; Tynan, Ribisl, &
Loomis, 2012), the extent of the variation between state tax
and price indicates that legal pricing mechanisms, such as discounts and coupons, are potentially in play to blunt the impact
of tax increases. As such, it is important that researchers and
policy makers consider the potential heterogeneity in factors
influencing cigarette prices within and between states in their
assessments of cigarette affordability as a tax benchmark.
As is evident, cigarette taxation and its associated components form a complicated landscape across U.S. states.
Additionally, state differences in cigarette affordability due to
differences economic levels and growth over time add an additional layer of complexity that cannot be overlooked. These
findings should reinvigorate the discussion about maximizing
the public health gain from cigarette taxation to reduce consumption and smoking disparities across U.S.states.

Supplementary Material
Supplementary Table 1 and Figure 1 can be found online at
http://www.ntr.oxfordjournals.org.

Funding
This study was funded by the Intramural Research Department
of the American Cancer Society.

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poorer smoker had to work 32.7min to obtain the same pack.

Cigarette affordability varied substantially across states.
Cigarettes were most affordable in the Southeast and parts
of the West, and least affordable in the Northeast. This most
likely contributes to the significant differences in cigarette
consumption and consumers responsiveness to price changes
across states.
Even though cigarette prices increased significantly in the
past 40years in the United States, affordability did not since
incomes also grew significantly. In 1970, cigarettes were least
affordable in most Southeastern states, but over time, cigarettes
became more affordable in this part of the United States due
to conservative tobacco tax policies and significant income
growth. On the other hand, the majority of Northeastern states
managed to keep the growth in cigarettes prices on par with
inflation and income. Particularly worrisome is the affordability
trend in the past decade. Between the early 2000s and 2008 as
real prices remained more or less stagnant, rising incomes made
cigarettes more affordable or kept affordability unchanged in
32 of U.S.states. This situation along with stagnating tobacco
control spending in the United States may have caused the stall
in smoking prevalence since 2005 (Campaign for TobaccoFree Kids, 2011a; Centers for Disease Control and Prevention,
2011). From a policy perspective, these findings indicate that
greater attention should be placed in ensuring that the growth
in cigarette excise taxes and prices should outpace income
growth in U.S.states. Such tax increases should be combined
with strategies that reduce access-related barriers to evidencebased cessation services and thereby optimize quitting among
the most vulnerable smokers (smokers from low-income
households) (Institute of Medicine, 2007).
Another important tobacco control policy direction that
these findings could provide is in setting a cigarette tax policy
benchmark in U.S.states. Tax benchmarking guides tax policy
against a recommended level that will most optimally reduce
consumption. Currently, there is no clear process via which
states increase their cigarette taxes (American Cancer Society
Cancer Action Network, personal communication, June 15,
2012). State-level tax increases are usually in amounts that will
reduce budget deficits or are lobbied for by tobacco control
advocates without an explicit evidence-based benchmark guiding the amount of tax increase. Internationally, several standards
have been recommended by the World Bank and World Health
Organization. The World Bank recommends that total taxes
(excise and sales taxes) account for between two thirds and four
fifths of the retail price of cigarettes, whereas the World Health
Organization recommends that excise taxes alone account for
at least 70% of retail prices (Jha & Chalpupka, 1999; World
Health Organization, 2008). This study found that the average
state and federal excise taxes as a percentage of price in the
United States was about 41% in 2010, ranging 57% in from
Rhode Island to 28% Virginia, which was significantly less
the World Bank and World Health Organization recommendations and many other high-income countries (Jha & Chalpupka,
1999; World Health Organization, 2008). However, a tax as a
percentage of price benchmark does not account for differential income levels across states, as well as differential trends in
income over time across states. An alternative recommendation that is focused on the affordability of cigarettes and now
recommended by the World Health Organization is that excise
taxes increase in such a manner as to reduce the affordability

Cigarette Affordability in the U.S.

Declaration of Interests
None declared.

Acknowledgments
The authors would like to thank Deepa Naishadham for her
assistance with generating U.S.state maps.

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