Secular trends in tobacco consumption: the case of Italy, 1871-2010

This paper presents the first ever statistical reconstruction of annual tobacco consumption in Italy from 1871 to 2010. The time series of total tobacco is disaggregated into its four major components (cigars, cigarettes, cut tobacco, and snuff), both in physical and monetary term. Our task was largely facilitated by the peculiar institutional setting concerning the Italian case. From 1862 to recent years, the tobacco sector has been managed by the State under a regime of public monopoly so that a rich and detailed documentation is available. Using standard estimation techniques, demand models for aggregate tobacco are estimated for three separate sub-periods: 1871-1913, 1919-39, and 1946-2010. Price elasticities, estimated over a time period covering about one and a half centuries, belong constantly to a narrow [-.25, -.75] set. The result that the demand for tobacco is not elastic to its price constitutes apparently a re-invention of the wheel. Less so, when one considers that over the last 150 years policy perspectives and individual attitudes towards consumption of tobacco have changed dramatically.