When in doubt, call them deniers

There is much rejoicing amongst Aussie anti-smoking zealots at the arrival of new data which, they say, proves that plain packaging is a great success. Simple Simon Chapman and his underlings are urging people to visit this webpage to see the good news of falling tobacco consumption.

The only problem is that it's not new data. It's exactly the same ABS data that people have been discussing for the last few days, including in this blog post. As previously mentioned, the figures only support the idea that plain packaging reduces tobacco consumption if you ignore the whole of 2013 and focus only on the first quarter of 2014 when there was a big increase in tobacco tax. Attributing a decline in consumption that took place in early 2014 to a policy that was introduced in December 2012 is mischievous to say the least.

Nevertheless, the Kouk has taken the nuclear option of calling those who have noticed that the emperor is wearing no clothes 'deniers'. He continues to talk about "a 5.3 per cent fall in the overall volume of tobacco consumed between the December quarter 2012 and the March quarter 2014". His maths are wrong, it's actually a 2.9 per cent fall, but the important point is that this decline did not take place in the year after plain packaging came in. It took place after a 12.5% tax hike was implemented twelve months later. In the June and September 2013 quarters, sales were higher than they had been in December 2012. These were the first increases in tobacco sales for several years.

It doesn't look great for plain packaging, does it? Especially after all that guff about smokers seriously, er, thinking about giving up smoking and calling the quitline in their, er, hundreds.

Simply put, the plain packaging desperados want you to ignore what happened after plain packaging was introduced and instead focus on what happened after the December 2013 tax hike. You can see why they want you to do that. The graph below shows what happened in the first year of the plain packaging regime. Bugger all.

But this is the graph that the straw-clutchers want you to focus on, or rather they want you to focus on the far right hand side and mentally substitute the words 'tax hike' for 'plain packaging'. Yes, tobacco sales were lower in the first quarter of 2014, but there is a pretty obvious explanation for that.

The price elasticity of cigarettes is often said to be -0.4 so we would expect a 4 per cent decline in consumption from a 12.5 per cent tax hike regardless of any other policy intervention (roughly speaking, based on tax making up 80% of the price—and this refers to legal sales; what it does to illicit sales is another matter.) In fact, it fell by less than that (2.5 per cent) so even that policy failed to live up to expectations.

Kouk then offers a wager...

I will wager that when we get the ABS measure for the household consumption of tobacco and cigarettes for the December quarter 2014, it will show lower consumption than for ANY quarter in 2012 or 2013.

Of course, no one will take that bet because of the secular decline in tobacco sales and the tax rise. It's possible that sales might increase, but if he's only offering even money, I'd decline. But although I wouldn't take Kouk's bet, I would have happily taken a bet in 2012 on whether there would be an unusually large dip in consumption after plain packaging. I would have bet 'no' and I would have won.


UPDATE

ABS also has seasonally adjusted tobacco sales figures, shown below. Same story.