New SSE Riga/BICEPS research paper by Alf Vanags and Zane Cunska (BICEPS).
Executive summary. This study attempts to estimate the economic burden of tobacco smoking in Russia and hence to identify in money terms the economic benefits of smoking reduction in Russia.
The Russian smoking situation is located and analysed in the context of tobacco situation in Europe where using a base year of 2000 the percentage of regular daily smokers varied from 21% to close to 40% with the lowest rate observed in Sweden – just under 19%. In the same year the Russian Federation along with other former USSR republics had a total smoking prevalence rate of nearly 35%. The European situation is very different if male and female smoking prevalence rates are analyzed separately. The heaviest male smokers are found in Russia – more than 62%, whereas Sweden exhibits an especially low rate of just under 17%. Conversely, with a prevalence rate of only 12.6%, Russian women are among the least heavy smokers in the European region. The highest female smoking prevalence rates (22-36%) are observed in countries in the middle of Europe. Smoking prevalence among Swedish women is 21 %, well above minimum European rates.
The Russian Federation stands out with a steep, upward trend in smoking prevalence since 1991 and the trend suggests further increase in the future, whereas the average indicators of the EU and other CIS show downward trends, especially Sweden, where the smoking prevalence rate has dropped from 33% in 1980 to 19% in 2000 and to 16% in 2004.
In Russia smoking kills 332 thousand people a year, or 15% of all deaths. 240 thousand (231 thousand males + 9 thousand females) or 72% of them are still in middle age when they die. Men in Russia smoke more and are more severely affected by smoking hazard than women. One fourth of all deaths at all ages and one third at middle age are associated with tobacco smoking. For women, smoking causes 3% of all annual deaths. Significantly less – 3.5 thousand women vs. 47 thousand men (by a factor of 13) yearly die from lung cancer caused by smoking.
Smoking generates various financial and economic effects for society: increased health care expenditures, higher mortality, increased absenteeism from work and lower productivity by smokers, as well as implications for non-smokers via environmental tobacco smoke. In this report we have assessed in money terms the economic gain to Russian society if smoking prevalence rates for men in Russia were at the same levels as in Sweden.
Using a conservative estimate for smoking attributed health care expenditures (SAE) the estimated total sum spent yearly in Russia on the treatment of diseases that are caused by use of tobacco was found to be 3.4 billion USD, or 0.6% of GDP. At Swedish smoking prevalence rates SAE would be only 5% of current health expenditures or just over 1.5 billion USD. In other words reducing Russian smoking rates for men to Swedish levels would generate annual health care expenditure savings of nearly 1.9 billion USD.
A major gain from reduced smoking is the reduction in premature death among smokers. If Swedish male prevalence rates were reproduced in Russia 169 thousand people that currently die yearly from smoking caused illnesses would survive. This clearly is a benefit both directly for those who live longer and for society that cannot be measured in money terms. However, adopting a utilitarian approach to societal benefit means that the 169 thousand people would be in good health and working, producing on average 4106 US dollars per head of output. In other words reducing smoking prevalence among Russian men to Swedish rates would imply an economic benefit in terms of output gain equivalent to 693 million USD every year or 0.12% of GDP.
Putting these sums together implies that Russia would gain or save at least 2.57 billion USD or 0.43% of GDP a year if the smoking prevalence rates among men in Russia were reduced to the levels observed in Sweden in 2000. This is a conservative estimate of potential measurable benefits since it has not been possible to make reliable estimates of other important benefits of reduced smoking – most notably passive smoking.