The effect of increasing prices of tobacco The moderating and mediating role of financial stress
Master Thesis
Lotte Schaper S2930013 08-07-2020
University of Groningen
Faculty of Economics and Business Department of Marketing
Master Marketing Management Under supervision of Martijn Keizer
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Abstract
The purpose of this study was to find out the effect of increasing prices of tobacco on the amount of cigarettes smoked. A lot of research has already been done on this topic, but in this study the moderating and the mediating role of financial stress was taken into consideration.
In order to find out the effect of this variable, a quantitative research was conducted. This research consisted of an online questionnaire, which was filled in by 146 participants.
Statistical tests were conducted in SPSS in order to be able to draw conclusions based on the responses of the questionnaire. A set of hypotheses were provided to find evidence for the moderating and mediating role of financial stress on the participants’ smoking intention due to the increasing prices of tobacco. In the case of moderation, this means that the smoking
intention was decreasing, and for the mediation model smoking intention would be increasing.
According to the tests, the hypotheses needed to be rejected, because the results were not found significant. However, the impact of increasing prices of tobacco on the smoking intention was confirmed again. Furthermore, interesting topics for further research were proposed based on this research.
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Table of Content
Introduction………. 5
Literature Review……… 8
Incentives to quit smoking……….. 8
Interventions to promote quitting……… 9
The moderating role of financial stress……….. 11
The mediating role of financial stress………. 14
Hypotheses and conceptual models………. 16
Method……… 18
Data Collection……… 18
Participants……….. 18
Design……….. 18
Procedure………. 19
Experimental manipulation……….. 19
Control variables……….. 21
Materials……….. 21
Variable description………. 21
Scales……… 23
Analysis……… 24
SPSS………. 24
Results……….. 26
Data Analysis……… 26
Descriptive statistics………. 26
Correlations and reliability analysis………. 28
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Statistical tests……….. 31
Moderation effect………. 32
Mediation effect……… 33
Discussion………. 36
Conclusion……… 36
Limitations……… 38
Further research……… 39
Closure………. 41
References……….... 42
Appendix………... 49
1. Descriptive statistics……… 49
2. Correlations and reliability analysis……… 52
5
Introduction
Although most people know about the negative effects of smoking, still many smokers cannot commit themselves to quit. In general, smokers acknowledge the harm they are doing to themselves, and many admit that they do not even enjoy it, yet they still continue to smoke.
(Fidler & West, 2011; Ussher, Brown, Rajamanoharan, & West, 2014). But why do people continue to smoke? CNN Health found that ‘while smoking harms your health, you don't notice it at first. That's why the World Health Organization calls tobacco a "gradual killer."
By the time smokers may feel the effects, they're addicted’ (Christensen, 2015). Furthermore,
‘most young smokers believe that they can easily quit at any time and nearly all believe that they won't be long-term smokers’ (McKee, 2015).
To reduce the amount of smokers, and in an attempt to make smoking less normal,
governments came up with several interventions. An intervention introduced by the Dutch government was to increase the prices of tobacco again at the start of 2020. The excise duties are increased, to make smoking less attractive. This was done first on January 1st and a second time on April 1st. As a consequence, those smokers who manage to stop, will save a lot of money (de Witt Wijnen, 2019). In this way people are expected to feel ‘rewarded’ when they quit smoking.
Even though governments are trying hard to decrease the amount of people smoking, the world is not smoke-free yet. Research has been done into the effects of increasing the prices of tobacco. “Worldwide, a reduction of about a third could be achieved by doubling the inflation-adjusted price of cigarettes, which in many low- and middle-income countries could be achieved by tripling the specific excise tax on tobacco. Without large price increases, a reduction in smoking by a third would be difficult to achieve” (Jha & Peto, 2014).
6 However, in this case still only a reduction by a third is achieved. Therefore, if increasing the prices of tobacco alone does not withhold people from smoking, then there must be other factors that prevent people from quitting smoking. In this research I investigated the moderating and mediating role of financial stress on this process. ‘Financial stress refers to the experience of economic hardship and may include financial anxiety, being in debt and being unable to afford consumer items such as food and clothing’ (Siahpush, Borland &
Scollo, 2003).
Financial stress seems to be a barrier for people to quit smoking. Studies by Graham showed that material disadvantage and financial stress (poor housing conditions, long term
unemployment, and low income) were highly associated with smoking status and were the major barriers to quitting (Graham, 1989; Graham, 1993). To extend the existing literature, in this research I wanted to find out how the increasing prices of tobacco influence peoples’
decision to smoke. But together with this, I investigated what the role of financial stress is on this process. So far, there has been no clear evidence on what the effect of financial stress is in the process of increasing prices to reduce smoking.
It is expected that this influence of financial stress can work out two different ways. It might be that due to this financial stress, people do not want to smoke anymore to get rid of the stress (moderation). However, it might also be possible that the amount of smoking will increase due to financial stress, by using smoking to relief the stress (mediation). Evidence on this can be found in the literature review. Providing evidence on the role of financial stress may help governments in their decision making on the interventions regarding the quitting of smoking. Governments have been trying several interventions, but in this research I
7 investigated the working of one of these interventions, and especially what the effect is on people in case of financial stress. The research question is therefore: What is the effect of increasing prices of tobacco on peoples’ smoking intention, and what is the role of financial stress on this process?
To be able to find evidence on the effect of the increasing prices of tobacco on peoples’
smoking intention, and the moderating and mediating role of financial stress, an online survey has been held among current smokers and former smokers. After conducting this
questionnaire, statistical tests were done in order to test the hypotheses. These results were used to answer the research question.
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Literature Review
Incentives to quit smoking
It is widely known that smoking is damaging human health and can even cause death. The World Health Organization (WHO) currently estimates that each year smoking accounts for about 6 million deaths worldwide and causes about half a trillion dollars in economic damage annually (WHO, 2013). Governments are trying to reduce these amounts, and therefore started several interventions, which will be elaborated further later on.
It is without doubt that health issues are an important argumentation to start interventions, because if current smoking patterns persist, tobacco will kill about 1 billion people this century, mostly in low- and middle-income countries. About half of these deaths will occur before 70 years of age (Peto, Lopez, Boreham, & Thun, 2012; Peto & Lopez, 2001; Jha, 2009;
WHO, 2013). Surveys done in the USA and the UK showed that the main reason smokers want to quit, is concern about health, followed by costs, and social concerns (Lader, 2006;
McCaul, Hockemeyer, Johnson, et al., 2006). Although people have incentives, both financial and health-related, they often fail to adopt healthy behaviors. This is because these benefits are delayed or intangible. The immediate disadvantages and delayed benefits of behavior change result in decision errors (Cahill & Perera, 2011). This is because people only start to notice the health benefits after several months or even years after quitting, while the bad feelings that come with quitting are felt immediately. Due to these decisions errors, focusing interventions on health behavior might not be the best option. A better course of action might be to focus on the financial aspect of smoking, since the effects are felt immediately.
Therefore, focusing on the financial aspect might be more effective to let people quit smoking and the emphasis of this study was put on these aspects.
9 Quitting will have some personal advantages for people, such as the losses that could be avoided by the individuals who quit smoking. This includes cost savings from smoking in terms of reduced morbidity and mortality, but also reductions in the cost of illness, and the marginal risk of disease (Oster, Colditz & Kelly, 1984). However, not only personal
advantages will play a role, but also advantages for society as a whole. These can be observed in terms of longevity and improvement in the quality of life of the quitters, but also that of passive smokers. Furthermore, there will be reduced costs of cleaning up the environment after smoking, reduction in fires caused by smoking, and the resulting damage or destruction, improved workplace productivity and an overall healthier population (Ekpu & Brown, 2015).
A lot of these advantages have to do with health, but all of them are to a certain extend related to the financial aspect. Therefore, focussing on the financial advantages indeed seems like one of the best options. Several pieces of literature suggest that smoking cessation interventions, coupled with regulations and legislations, are effective ways to reduce smoking prevalence (Collins & Lapsley, 2008; Collins & Lapsley, 2010; Song, Raftery, Aveyard, Hide, Barton, &
Woolacott, 2002; Woolacott, Jones, Forbes, et al., 2002).These regulations and legislations coupled with the interventions are elaborated more in the next paragraph, focussing on the financial interventions.
Interventions to promote quitting
What cannot be neglected in the case of smoking, is the fact that smoking is an addiction that is difficult to halt on the basis of will power alone. Evidence shows that only 3-7% of smokers who attempt to stop smoking on will power are still abstinent after one year (Feenstra,
Hamberg-van Reenen, Hoogenveen, & Rutten-van Molken, 2005). ‘In order to enhance quit rates, there must be some deliberate measures to incentivize cessation. There are different forms of smoking cessation interventions, and they range from pharmacological treatment
10 interventions to policy-based interventions, community-based cessation programs, TMT- based interventions, school-based interventions, and workplace- or employer-based interventions’ (Ekpu & Brown, 2015).
In this review, the focus is put on policy-based interventions, and especially the increased prices of tobacco. The most common way to realize this intervention is by an increase in taxes and excise costs. This puts an upward pressure on tobacco prices, and higher tobacco prices tend to significantly reduce the consumption of tobacco (Ahmad, 2005; Ahmad & Franz, 2008). What was investigated in this research, was whether this upward pressure on tobacco prices was also putting an upward pressure on people’s feeling of financial stress.
Research has been done into the subject of increasing prices, and the results are promising. As mentioned before, the delayed benefits can be a problem for interventions that are focussing on the health aspect. However, when using the increased prices of tobacco, people will experience the consequences immediately. Therefore, the focus of this research is on the financial consequences, rather than health consequences, to find out whether these interventions are effective. The interventions might be effective because people may feel financially stressed by the increase in prices. In the first part of the research, the effect of this financial stress has been considered as the moderator. In this way, it can be deduced whether the increasing prices are letting people feel financially stressed, and that they will therefore quit smoking.
On the other hand, increasing prices might also work the other way around, and cause people to start smoking more due to this financial stress. In this case financial stress can be
considered as the mediator. By investigating the effect of increasing tobacco prices while
11 taking these two models into consideration, governments may find out whether the financial interventions are actually resulting in a decreasing smoking intention, as has been found by previous research. The moderation and mediation models are discussed in more detail in the next paragraphs.
The moderating role of financial stress
Financial interventions have been used successfully before in order to reduce smoking.
Between 1990 and 2005, France tripled its inflation-adjusted cigarette prices by raising excise taxes substantially, and in so doing halved cigarette consumption (Jha & Peto, 2014).
Furthermore, ‘worldwide, a reduction of about a third could be achieved by doubling the inflation-adjusted price of cigarettes, which in many low- and middle-income countries could be achieved by tripling the specific excise tax on tobacco’ (Jha & Peto, 2014). Research showed that large increases in specific excise taxes on tobacco are particularly important, because they can have a substantial and rapid effect on consumption (WHO, 2010; Jha &
Chaloupka, 1999; Jha, Chaloupka, Moore, et al., 2006; IARC, 2011). Moreover, reviews of comprehensive control programs in various U.S. states (MMWR, 1999; Levy, Hyland, Higbee, Remer & Compton, 2007) and other high-income areas (Chaloupka, Hu, Warner, Jacobs & Yurekli, 2000) concur that higher prices account for much, but not all, of the decline in smoking.
Putting it more into numbers, the World Bank did some research into the relation between cigarette prices and consumption. According to the World Bank, when taxes are raised on tobacco, consumption decreases especially on young people; a 10% cigarette price increase results in a 7% decrease in smoking by young people and 4% by the general public (Jha &
Chaloupka, 1999). It has also been hypothesized that a price increase of 10% would reduce
12 smoking by 4% in high-income countries and by about 8% in low-and middle-income
countries (Mackenzie, Bartecchi, & Schrier, 1994; Jha & Chaloupka, 2000). This again provides evidence for a decrease in cigarette consumption as a result of increasing prices.
This implies that the incentive of increasing prices of tobacco helps smokers to quit. Many other strategies have been tried before to decrease the amount of smoking, but as Jha & Peto conclude in their research: ‘A large increase in inflation-adjusted price is, however, a key component of any realistic strategy to reduce smoking substantially during the 2010s or 2020s’ (Jha & Peto, 2014).
‘Quitting smoking has been shown to reduce financial stress’(Siahpush, Spittal, & Singh, 2007). However, does it also work the other way around? Does financial stress also help to reduce the amount of people smoking? The studies described above show evidence for a reduction in the amount of smoking as a result of the process of increasing prices. In this research this correlation was evaluated as well, but this time the effect of financial stress was taken into account. Considering financial stress as a moderator, this means that due to the increased prices people will quit smoking, which is influenced by financial stress. This model of moderation can be found in figure 1. Using financial stress as a moderator means that the effect of economic hardship, financial anxiety, and being unable to afford consumer items, will cause people to quit smoking more often when the prices of tobacco increase. This was supported by studies in the United States and Sweden, which found that ‘because
unemployment leaves individuals with less discretionary income, individuals may simply decide to forgo consumption of tobacco. For instance, the possibility that recessions are good for health has been highlighted by ecological and cross-sectional evidence linking higher unemployment rates with lower rates of smoking’ (Ruhm, 2000; Novo, Hammarstrom &
13 Janlert, 2000). The fact that people have less discretionary income may cause people to
experience economic hardship and financial anxiety, and not being able to afford consumer items, such as food and clothing.
Furthermore, research has been done into the psychological well-being of people, and it has been found that this can be influenced by the amount of income people receive, which is known as the Easterlin Paradox. According to this paradox, income, self-reported happiness, and life satisfaction are correlated within but not across countries and are uncorrelated above income levels required to meet basic needs (Easterlin, 1974). This is explaining why people may feel financial stress due to the decrease of discretionary income. People are more vulnerable for anxiety and negative feelings when their income decreases.
From a more individual perspective, it has been found by research using a population-based sample from the US, UK, Canada and Australia, that between one-fifth and one-third of respondents reported to have spent money on cigarettes that they ‘knew would be better spend on household essentials like food’ (Siahpush, Borland, & Yong, 2007). Next to this, it was found that lower income smokers are notably more likely to experience ‘smoking-induced deprivation’ than their well to do counterparts (Siahpush, English, & Powles, 2006). This suggests that it is more likely that these people are experiencing financial anxiety to a certain extent, which is part of the term financial stress. This deprivation and financial anxiety might be leading to people quitting smoking more often. In that case, financial stress might have the moderating effect as described before.
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The mediating role of financial stress
Yet, if several interventions have been tried before, and these should have had a reasonable impact, then why are so many people still smoking? An explanation for this might be that the effect of financial stress is working the other way around. In this case financial stress does not have a moderating role, but a mediating role. It was found that ‘among the general population, smokers experience higher financial stress than non-smokers, and ex-smokers with high financial stress are more likely to relapse’ (Siahpush, & Carlin, 2006). In the next paragraphs some possible reasons for this phenomenon are given.
Stress relief is commonly proposed as a reason for smoking. It is argued that socioeconomic differentials in smoking are caused by differences in financial and/or psychological stress (Graham, 1993; Stewart, Brosky, Gillis, et al., 1996; Dorsett & Marsh, 1998; Stronks, van de Mheen, Looman, et al., 1997; Parrott, 1999). However, it is plausible that the cost of smoking may create financial stress, especially among the poor (Siahpush, Borland, & Scollo, 2003).
This means that increasing the prices of tobacco causes financial stress. Due to the
experienced financial stress, people start smoking more to relief this stress. Therefore, in this case financial stress does not decrease the amount of smoking, but it increases the cigarette consumption instead. Financial stress is then considered as the mediator, which model can be found in figure 2.
Being in a negative affective state and feeling financially stressed can influence the decision to smoke. In a study using cross sectional and qualitative data from a sample of mothers from working class households, Graham reported that material disadvantage and financial stress (poor housing conditions, long term unemployment, and low income) were highly associated with smoking status and were the major barriers to quitting (Graham, 1989; Graham, 1993).
15 Furthermore, Dorsett and Marshall did some research into this topic, and using a sample of disadvantaged lone parents in Britain, they found that financial hardship was the main reason for being unable to quit smoking.Hardship was referred to as the experience of financial anxiety, being in debt that cannot be paid off easily, and not being able to afford essential consumer items such as food and clothing (Dorsett & Marsh, 1998). In a similar study, Graham also came to the conclusion that the major reason for relapse after cessation was difficulty coping with everyday problems and stress, including financial stress (Graham, 1993). These studies are suggesting that financial stress is leading to more smoking, which is supporting the mediation model.
Marsh and McKay turned it around, and wanted to find out what the effect of smoking was on financial stress. They found out that smoking is a strong predictor of material hardship
independently of marital status, lack of educational qualifications, low income, manual work, claiming welfare benefits, and social tenancy (Marsh & McKay, 1994). Also Siahpush, Borland & Scollo did a similar type of research, this time in Australia. They found the
following: “Results revealed that smoking households with a higher percentage of expenditure on tobacco face an increased chance of experiencing financial stress. Even among high
income households smoking was a significant predictor of financial stress” (Siahpush, Borland, & Scollo, 2002). This means that in households with smoking people, the chance of financial stress is higher than in non-smoking households. This is suggesting that there is a relationship between smoking and financial stress. Therefore, part of this research is to find out whether the financial stress caused by increasing tobacco prices leads to more smoking due to the mediating effect.
16 The conclusion that has been drawn on this by Siahpush, Borland & Scollo is: ‘it is plausible that financial stress may lead to continued smoking, money spent on cigarettes will diminish available income and thus can contribute to financial stress. In all likelihood the relationship between smoking and financial stress is non-recursive, such that tobacco expenditure
contributes to stress and stress in turn encourages smoking’ (Siahpush, Borland, & Scollo, 2003). These findings support the hypothesis that financial stress can have a mediating effect.
Hypotheses and conceptual models
To evaluate the role of financial stress on smoking in this research, two conceptual models are provided. Model 1 describes financial stress as a moderator, while in model 2 financial stress has a mediating role. These relationships are tested based on a survey conducted among current smokers and former smokers. This research is answering the following question: What is the effect of increasing prices of tobacco on peoples’ smoking intention, and what is the role of financial stress on this process?
Based on the literature about increasing prices leading to a decrease in peoples’ smoking intention, with financial stress being the moderator, the following hypotheses are proposed and tested:
Hypothesis 1: The increase of prices of tobacco will decrease peoples’ smoking intention.
Hypothesis 2: Financial stress will have a moderating role in the decision to smoke.
According to the hypotheses, the following conceptual model was provided.
17 Figure 1: Conceptual Model 1 (Moderation)
However, it is suggested that financial stress might have another effect. According to different studies, it is possible that the increase in prices of tobacco leads to more financial stress, and that this again leads to a higher smoking intention. In this case financial stress has a mediating role. According to these insights, two more hypotheses are proposed:
Hypothesis 3: An increase in the prices of tobacco leads to more financial stress.
Hypothesis 4: More financial stress leads to a higher smoking intention.
These hypotheses lead to the second conceptual model of this research.
Figure 2: Conceptual Model 2 (Mediation)
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Method
Data collection
Participants
The data for this research was collected by conducting an online survey. It was considered important that all participants were current or former smokers. Participants for this survey were asked to fill in the questionnaire through online channels. Snowballing has been used to increase the amount of participants. A lot of smokers know other smokers, so they were asked to spread the questionnaire around their friends and family. Furthermore, the questionnaire was placed on a Facebook group for people who want to quit smoking.
To be sure that all participants were current smokers or former smokers, the first question was: ‘Are you a smoker or have you been a smoker?’ In this way only current smokers and formers smokers were able to participate in the questionnaire. The participants were of all ages, ranging from 17 to 82 years old. Because it is not allowed in the Netherlands to smoke below the age of 18, only one participant was below the age of 18, but all other participants were older than 18. No distinction has been made between males and females. The research counted 228 participants at first, but because some of the responses had to be removed, a sample of 146 remained. How these responses were removed is described later on, in the analysis section. The survey was conducted in Dutch, so therefore all participants are of Dutch nationality.
Design
As will be described in more detail later on, experimental manipulation was used in the survey. Participants were randomly assigned to the different experimental conditions. This random assignment was used to place subjects into the different treatment and control groups
19 to ensure that subjects in each group would have similar characteristics, so that they were equivalent (Coleman, 2019). In the beginning of the questionnaire, all participants saw a package of cigarettes, all with the same price (€8,40). The participants were asked to rate their willingness to pay, and their purchase intention according to scales. Later on, after reading an article about economic downturn, all participants saw a package of cigarettes again. However, this time half of the participants saw the same price of €8,40. The other half also saw the same package, but with a much higher price of €15,60. This random assignment was possible because participants were already selected for participation based on the fact that they were current smokers or former smokers, so no other distinction had to be made. In order to be sure that all participants were current smokers or former smokers, the first question was the
following: ‘Are you a smoker or have you ever been a smoker?’ If the answer to this question was ‘no’, the system automatically directed these people to the end of the survey. These participants have been removed from the sample.
Procedure
Experimental manipulation
To find differences in behavior of participants in given situations, experimental manipulation was used in the survey. This experimental manipulation was used in the way of showing packages of cigarettes, but with different prices. Firstly, all participants saw the same package of cigarettes with a price of €8,40 on it. This is an existing package, so with a realistic price on it. People were asked how much they are willing to pay this price. This was done by letting them rate their feelings regarding given questions. These questions were ‘How much are you willing to pay the price of the package?’ and ‘How much are you willing to buy this
package?’ Participants were able to rate this on a 7-point scale, ranging from ‘I am absolutely not willing to pay to this price’ to ‘I am absolutely willing to pay this price’, and ‘I would
20 absolutely not buy this package’ to ‘I would absolutely buy this package’. In both cases there was a neutral point in the middle, and all points were equally distributed, so that all distances between these points could be treated as equal.
After that, financial pressure was put on participants so that they would feel financially stressed. The participants were asked to read information from an article about economic downturn and high unemployment, due to the recent Corona virus crisis. The information has been based on the article ‘Enorme terugval Nederlandse economie en hoge werkloosheid door coronacrisis’(Enormous relapse of Dutch economy and high unemployment due to
coronacrisis) (Hart van Nederland, 2020). It was intended that this information about economic downturn and high unemployment may cause the feeling of economic hardship.
This includes the feeling of financial anxiety, not being able to pay for consumer items and being in debt. In this way, it is creating the feeling of financial stress.
Next, the same existing package of cigarettes has been shown to the participants, but with different prices. Half of the participants saw the same price on the package (€8,40), and the other half saw a much higher price (€15,60). Again, participants were asked to answer the same questions and rate them on the same scale as the first time. In this way, it could be found out whether feeling financially stressed has an impact on the relationship between the
increasing prices, and peoples’ smoking intention. Along these lines the moderating and the mediating role of financial stress could be measured. This is possible because the differences can be found between measuring the condition before reading the article about economic downturn, and after reading the article. These differences represent the effect of financial stress on participants’ decisions.
21 Control variables
After the experimental manipulation took place, the survey was continued to find out the effects of the control variables. Variables that were taken into account are demographic factors, like age and gender. Participants were also asked whether they are a current smoker, or if they are a former smoker. However, also some more specific control variables were used.
These were ‘the time someone is a smoker or has been a smoker’ and ‘the amount of cigarettes the participant is or has been smoking per day’. In the case of current smokers an extra question was asked about the stop intention someone might have.
Participants were also asked about their financial situation. Because of privacy reasons this has not been narrowed down into details, but the question was asked if participants ever felt that they did not have sufficient financial resources. Furthermore, participants were asked to describe their financial situation according to several given statements. In this way an image could be created about how people think about their own financial situation. This is elaborated in more detail in the variable description.
Materials
Variable description
The smoking intention of participants was included in the research as the dependent variable.
This was measured by the amount of money participants were willing to pay for the given package of cigarettes, and by asking how much participants want to buy the product. This was measured by the ratings participants were asked to fill in regarding the questions ‘how much they are willing to pay for the package’ and ‘how much they are willing to buy the package’.
The question ‘How much are you willing to pay for this package?’ measured the willingness to pay of the participants. The question ‘How much are you willing to buy this package?’
22 measured the purchase intention of the participants. These questions were used in the same way in all three conditions: the first time participants saw the package, and the second time when half of the participants saw the same price, and the other half saw a much higher price.
To measure the results of these variables, the questions regarding the conditions participants saw the second time (both the same price and the higher price) were taken together as a sum variable. This was possible due to a significant correlation (r=,933 and p=,0000) and a Cronbach’s Alpha of ,966, which should be >0,6. This sum variable was used as the dependent variable, which measured the smoking intention.
The independent variable in this research was the increasing prices of tobacco, which was created through showing the packages with different prices. For the analysis, these two different conditions were split up and rated on a 1 or a 2, depending on which condition the participant was assigned to, and this was taken as the independent variable.
The moderator and mediator in the different conceptual models of this research was financial stress. This feeling was created by letting participants read the article about high
unemployment and economic downturn, as mentioned before. Furthermore, questions were asked about participants’ financial situation. The first question was ‘Did you ever experience financial stress?’ This question could only be answered with ‘yes’ or ‘no’. This variable is referred to as ‘financial stress’ later on. After that, participants were asked to describe their own financial situation according to six given statements, and a seventh option being ‘other’.
The options ranged from ‘I have a deficit of financial resources every month’ to ‘I can afford luxury goods and services, and can still save an amount of money every month’. This variable is referred to as ‘financial situation’ later on. The last question on participants’ financial situation focussed on the Corona crisis, namely ‘Do you experience extra financial stress due
23 to the possible economic downturn with regard to the Corona crisis?’ This question could again be answered with ‘yes’ or ‘no’. This question was included because participants read the article about the Corona crisis to let them feel financially stressed. This variable is referred to as ‘extra financial stress due to Corona’. All these questions were used to give insight into how people thought about their own financial situation. Two of the questions are directly asking about financial stress, while the second question is referring to financial stress
indirectly. In the latter case financial stress is not mentioned in the question, but by describing their financial situation people are telling whether they are able to buy the needed consumer goods every month. Furthermore, when people are saying that they are not able to pay the bills every month, there is a great possibility that they are in debt. This together may lead to financial anxiety, which collectively describes the phenomenon of financial stress.
It was not possible to create a sum variable for the questions about financial stress because of a Cronbach’s Alpha of ,497, which should be >0,6. Therefore, the variable that was called
‘financial situation’ was used for the analysis. The explanation for this can be found in the paragraph ‘correlations and reliability analysis’ in the results section.
Scales
To find out whether participants were willing to pay the price of the package of the cigarettes, and if they were willing to purchase the package, a Likert-scale was used. This provided more detailed information than only asking a yes/no question.A 7-point Likert scale was used, ranging from ‘I am absolutely not willing to pay this price for this package of cigarettes’ to ‘I am absolutely willing to pay this price for this package of cigarettes’ and ‘I am absolutely not willing to buy this package of cigarettes’ to ‘I will definitely buy this package of cigarettes’.
Both questions had the option ‘Neutral’ in the middle. All other options were equally
24 distributed between these points. The scales were created in a way that all distances between the points could be treated as equal.
Analysis
SPSS
Due to the use of the Likert scale, and all the distances between the points being treated as equal, interval data was provided. SPSS was used to analyze the results of the questionnaire.
With this online programme, the parametric and the nonparametric results could be found. By analyzing these results, the differences between the conditions of the experimental
manipulation, which consisted of the different prices on the packages of cigarettes, could be found. This was found due to the fact that there were visible changes on the ratings measured by the Likert scales between the different conditions. After conducting the experimental manipulation with the different conditions, the demographics were analysed and the means and maximum and minimum were given. To gather this information, questions were asked regarding the demographic factors in the survey. In this way additional information could be taken into account, so that conclusions were not drawn too easily. Furthermore, the online survey was conducted through Qualtrics, which gave some statistical insights when all participants had finished the survey, before conducting the statistical tests. All this statistical information could be used for the analysis.
After analyzing the descriptive statistics, tests were done to find out whether there were any statistically significant differences between the means of independent (unrelated) groups. To find out these differences, a linear regression analysis was used (Laerd Statistics, 2018). This test was used to find out the interaction effects between the variables. To test the moderating and the mediating effect of financial stress, the PROCESS-macro tool was found out to be
25 useful. This tool was created within SPSS. ‘PROCESS is an observed variable OLS and logistic regression path analysis modelling tool’ (Hayes, 2019). After conducting these tests in SPSS, the results were analyzed and included in this report. The analyses were used to show the relationships between the variables and to provide evidence for the given hypotheses. The linear regression tests were used to provide evidence for all four hypotheses.
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Results
Data analysis
After conducting the survey, which counted 228 participants, the data was analyzed. The data was transported from Qualtrics to SPSS. First of all, the data was checked on outliers, and on not usable responses. The first thing to select on, was the fact whether participants finished the survey. All unfinished surveys were removed from the dataset. This could easily be checked on Qualtrics, because it is giving the percentages of progress. If this was not 100%, the response was removed. After doing this, 168 responses remained. Some of the removed responses answered more questions than others, but none of them were close to 90%.
Therefore, all of them were removed.
Next, the time spent on the survey was checked. All responses below 100 seconds, and above 600 seconds were removed. In all cases where the time spent was very low, people answered
‘no’ to the question whether they were smokers at the moment or have been smokers. These responses were useless for the research, and were therefore removed. After doing this, 146 responses remained, which were used for the research.
Descriptive statistics
As mentioned above, participants were first selected on the fact whether they either are a current or former smoker or not. This was based on the first control question, which could be answered with ‘yes’ or ‘no’. All people that answered ‘no’ to this question were removed from the sample. In the second question, participants were asked whether they are a current smoker or a former smoker, and here they could choose between the two options ‘current smoker’ or ‘former smoker’. In the sample of 146 participants, 40 were current smoker, which is 27,4%. This means that 106 participants, which is 72,6% of the sample, was a former
27 smoker. These former smokers were asked to judge the situation regarding their feelings during the time they were a smoker, and not how they feel right now, because this feeling is expected to be different.
Regarding gender, 22,6% of the sample was male, and 77,4% was female. The age is ranging from 17 to 82 years old. The average age of the sample is 41,8.
From the group of current smokers, the average amount of years they are smoking was 20, with a minimum of 2 and a maximum of 50. On average they were smoking 11,9 cigarettes per day, with a minimum of 2 and a maximum of 25. For the group of former smokers, the average amount of years they have been smoking is 23,9, with a minimum of 6 months, and a maximum of 54 years. On average, they were smoking 18,5 cigarettes per day, with a
minimum of 1, and a maximum of 35. The numbers for the current smokers are slightly higher, but also this group of participants is bigger. The current smokers are asked whether they had the intention to stop, and 55% said ‘yes’, 25% ‘maybe’, and 20% answered ‘no’.
In order to gather data for the moderator and mediator financial stress, participants were asked whether they were experiencing financial stress. On this question 68 participants answered
‘yes’, which is 46,6% of the sample. The other 53,4%, which stands for 78 participants, answered this question with ‘no’. A second question on participants’ financial situation was
‘How would you describe your financial situation?’ In this question participants had seven options to choose from. Only one participant said to have a lack of financial resources every month. 5 participants answered that they do not have sufficient financial resources every month (3,4%). Taking a look at the description of financial stress, it can be concluded that at least these six people are experiencing financial stress. These participants are not able to buy consumer goods, and are not able to pay their bills every month. This may lead to financial
28 anxiety, and to the experience of economic hardship, which all refers to financial stress.
According to 35 participants, they have sufficient financial resources every month, but cannot spend money on something ‘extra’, which counts for 24% of the sample. These participants are probably able to buy consumers goods, but are not able to spend something extra, or to save some money. When these people need to buy something expensive, this is not possible for them. Therefore, there is a chance that they are in debt, which leads to financial anxiety. It is therefore plausible that these participants are experiencing financial stress. The biggest group, 43 participants (29,5%) answered to have enough financial resources to spend on things that they need and that they like. 39 participants said to have enough financial
resources, and are also able to save some of the money every month (26,7%). A group of 21 (14,4%) participants answered to be able to spend money on luxury goods, and also be able to save some money every month. The last option for this question was ‘Different’, which was chosen by 2 participants. Because this question is providing the most details, it was used to measure financial stress as the moderator and mediator in the statistical tests. The last question on participants’ financial situation, was whether they were experiencing extra financial stress due to the Coronacrisis, and 15,1% answered ‘yes’ to this question. So 84,9%
of the participants did not experience extra stress due to this crisis. The tables with all these numbers can be found in Appendix 1. After checking all descriptive statistics no new outliers were found in the dataset.
Correlations and reliability analysis
Because the dependent variable consisted of two questions per condition, the correlation between these questions was checked. In order to make the difference between the conditions more clear, condition 1 will be referred to as ‘Same Price’. In this condition, participants saw
29 the second time the same price on the package as the first time. Condition 2 will be referred to as ‘High Price’, because in this condition participants saw a much higher price the second time they saw the package of cigarettes. The first time the participants saw the package of cigarettes, will be referred to as ‘Normal Price’, because this is the realistic price of the given package of cigarettes.
In order to find out if a sum variable could be created for ‘willingness to pay’ and ‘purchase intention’, the correlation between the questions measuring these variables was looked into.
On the sample of 146 participants, it has been found that the variables ‘willingness to pay’
and ‘purchase intention’ correlate significantly with each other, with r=,933 and p=,000. This means that when participants say they are willing to pay the price of the package of cigarettes, they are also actually willing to buy the package of cigarettes. The numbers can be found in table 7 in Appendix 2.
In the interest of creating a sum variable on the questions measuring financial stress, the correlations were checked again. The variable ‘financial stress’ refers to the question ‘Did you ever experience financial stress?’, as explained before. Similarly, ‘financial situation’ refers to the question ‘How would you describe your financial situation?’, and ‘extra financial stress due to Corona’ refers to the question ‘Do you experience extra financial stress due to the possible economic downturn with regard to the Corona crisis?’ This has already been elaborated more in the ‘variable description’ paragraph. It was found that the variables
‘financial stress’ and ‘financial situation’ correlate significantly with each other (r=,466, p<0,001). Also ‘extra financial stress due to Corona’ and ‘financial situation’ correlate significantly with each other (r=,280, p=0,001). Lastly, also ‘financial stress’ and ‘extra
30 financial stress due to Corona’ correlate significantly with each other (r=,221, p=,007). The details can be found in table 8 in Appendix 2.
To measure the reliability and assess consistency between multiple measurements, Cronbach’s Alpha was used. Firstly, the Cronbach’s Alpha for ‘willingness to pay’ and
‘purchase intention’ was measured. This resulted in a value of ,966. Because Cronbach’s Alpha needs to be >0,6 to create a reliable sum variable, it can be concluded that a sum variable could be created for ‘willingness to pay’ and ‘purchase intention’. This sum variable is then measuring ‘smoking intention’, which is the dependent variable. All numbers can be found in table 9, 10 and 11 in Appendix 2.
In order to measure the reliability and assess consistency between multiple measurements, Cronbach’s Alpha was also used to measure financial stress. The Cronbach’s Alpha given for the total of the three variables ‘financial stress’, ‘financial situation’, and ‘extra financial stress due to Corona’ is ,497. This is not sufficient to create a sum variable. Also when one item is deleted, the Cronbach’s Alpha is still not > 0,6. It is therefore not possible to create a sum variable. The details on this can be found in table 12, 13 and 14 in Appendix 2.
To be able to measure financial stress on the participants, the variable ‘financial situation’ was used. This variable describes participants’ financial situation over time most accurately. The other two questions on financial stress could only be answered with ‘yes’ or ‘no’. On the other hand, the question describing participants’ financial situation has more answer options, so it is more detailed. It gives a more detailed description about how much people are able to spend on consumer goods, how big the chance is that people are in debt, and are therefore
experiencing financial anxiety. It describes participants’ feelings with regard to economic
31 hardship most accurately. Collectively, this question gives an accurate representation of financial stress, and therefore this variable was used for the statistical tests. This same variable was used both as the moderator and as the mediator, in order to measure financial stress.
Statistical tests
With regard to testing the hypotheses, some statistical tests were done. A Likert-scale was used to measure the answers of participants, and the distance between the points can be treated as equal. This means that the data can be considered as interval data. The following two hypotheses are related to each other, and are related to the same conceptual model, the moderation model, so therefore they were tested together.
Hypothesis 1: The increase of prices of tobacco will decrease peoples’ smoking intention.
Hypothesis 2: Financial stress will have a moderating role in the decision to smoke.
Because both hypotheses provided interval data, they were tested according to a linear regression analysis. This was done through SPSS, by using the Process Macro. It was
expected that peoples’ smoking intention was decreasing due to moderating effect of financial stress.
The other two hypotheses were also related to each other, and belonged to the same conceptual model, the mediation model. Therefore, also these hypotheses were tested together.
Hypothesis 3: An increase in the prices of tobacco leads to more financial stress.
32 Hypothesis 4: More financial stress leads to a higher smoking intention.
The data for these hypotheses were also gathered through a Likert-scale, with the distance between the points being treated as equal. Therefore, the data was used as interval data, which made a linear regression analysis, using Process Marco, most suitable for both hypotheses. It was expected that the smoking intention would increase due to mediating effect of financial stress.
Moderation effect
In order to test hypothesis 1 and 2, the moderation effect of financial stress on the process of the decreasing smoking intention due to increasing prices of tobacco was tested. This was done through Process Macro in SPSS. The independent variable was ‘increasing prices of tobacco’, which was created by the experimental manipulation. The dependent variable was
‘smoking intention’, which was created by a sum variable of ‘willingness to pay’ and
‘purchase intention’. The moderator was ‘financial stress’, which was measured by the variable that was named ‘financial situation’. According to this, a regression model was provided. This model was considered as significant, because p=,0005. An R-squared of ,1165 is given, which can be found in table 1 below. This means that 11,65% of the variance is explained by the model, which is very low.
R R-squared MSE F df1 df2 p
,3413 ,1165 17,0166 6,2393 3,0000 142,0000 ,0005
Table 1 – Model Summary Moderation Effect
33
Coeff se t p LLCI ULCI
Constant 10,5297 4,1514 2,5364 ,0123 2,3231 18,7362
Increasing prices
-1,5179 2,6148 -,5805 ,5625 -6,6869 3,6512
Financial situation
,3603 ,9407 ,3830 ,7023 -1,4993 2,2198
Interaction -,3266 ,5916 -,5521 ,5817 -1,4961 ,8428
Table 2 – Model Moderation Effect
In table 2 the coefficients of the model can be found. However, none of these coefficients were found significant because of the high p-values. Therefore, no conclusion can be drawn based on this model, and hypotheses 1 and 2 needed to be rejected. This means that despite the support of the literature, the moderating role financial stress was not supported by the model. It can thus not be concluded that financial stress has an effect on the process of having a decreased smoking intention due to the increasing prices of tobacco.
Mediation effect
To be able to find support for hypotheses 3 and 4, the mediating effect of financial stress on the process of decreasing peoples’ smoking intention due to the increase of prices of tobacco was tested. Again, this was done through a linear regression model using Process Macro on SPSS. The independent variable was again ‘increasing prices of tobacco’, and the dependent variable was ‘smoking intention’. The difference is that this time not the moderating effect,
34 but the mediating effect was measured. Therefore, this time, ‘financial stress’ was the
mediator. In this case the model - with ‘smoking intention’ being the outcome variable - was found significant, with p=,0002. An R-squared with a value of ,1146 was given, which can be found in table 3 below. This means that 11,46% of variance is explained by the model.
R R-squared MSE F df1 df2 p
,3385 ,1146 16,9339 9,2516 2,0000 143,0000 ,0002
Table 3 – Model Summary Mediation Effect
Coeff se t p LLCI ULCI
Constant 12,6310 1,6538 7,6377 ,0000 9,3620 15,9001
Increasing prices
-2,9114 ,6814 -4,2725 ,0000 -.4,2584 -1,5644
Financial situation
-,1328 ,2950 -,4500 ,6534 -,7159 ,4504
Table 4 – Model Mediation Effect
By taking a closer look at the model, it could be concluded that the direct effect of ‘increasing prices of tobacco’ on ‘smoking intention’ was found significant with p=,0000. This means that with financial stress being the mediator, the increase in prices of tobacco, has an effect of peoples’ smoking intention. The coefficient is -2,9114, which means that by an increase in the prices of €1,-, the smoking intention decreases by -2,9114. This is what was found in prior researches as well. However, the intention of this research was to find evidence about the mediating role of financial stress on this process. In this research, the mediating role of financial stress was not found significant, due to a high p-value. This means that no
35 conclusion can be reached on the mediating effect of financial stress. Therefore, hypotheses 3 and 4 needed to be rejected, and the mediating role of financial stress was not supported. This means again that no evidence was found on the literature supporting the mediating role of financial stress. One conclusion that can be drawn from this model is the negative effect of increasing prices of tobacco on the smoking intention, which is strongly supported by the literature.
36
Discussion
Conclusion
The goal of this research was to answer the following research question :‘What is the effect of increasing prices of tobacco on peoples’ smoking intention, and what is the role of financial stress on this process?’ As research has shown before, the main reason smokers want to quit, is concern about health, followed by costs, and social concerns (Lader, 2006; McCaul, Hockemeyer, Johnson, et al., 2006). To find out the effects of increasing costs on the amount of smoking, a questionnaire was conducted among current smokers and former smokers.
However, another factor was taken into account, namely financial stress. ‘Financial stress refers to the experience of economic hardship and may include financial anxiety, being in debt and being unable to afford consumer items such as food and clothing’ (Siahpush, Borland &
Scollo, 2003).
Previous studies already investigated the effect of increasing prices of tobacco on peoples’
smoking intention. What mainly all of them found was that ‘a large increase in inflation- adjusted price is a key component of any realistic strategy to reduce smoking substantially during the 2010s or 2020s’ (Jha & Peto, 2014). However, the role of financial stress was never investigated in these researches. Therefore, the moderating and the mediating role of financial stress were taken into consideration in this research.
According to the literature, financial stress helps people in a certain way to decrease the amount of smoking. An example is that ‘because unemployment leaves individuals with less discretionary income, individuals may simply decide to forgo consumption of tobacco. For instance, the possibility that recessions are good for health has been highlighted by ecological
37 and cross-sectional evidence linking higher unemployment rates with lower rates of smoking’
(Ruhm, 2000; Novo, Hammarstrom & Janlert, 2000). This supports the moderating role of financial stress.
However, in other studies it was observed that ‘smoking households with a higher percentage of expenditure on tobacco face an increased chance of experiencing financial stress. Even among high income households smoking was a significant predictor of financial stress’
(Siahpush, Borland, & Scollo, 2002). Together with this, it was found that ‘material
disadvantage and financial stress (poor housing conditions, long term unemployment, and low income) were highly associated with smoking status and were the major barriers to quitting’
(Graham, 1989; Graham, 1993). This supports the mediating role of financial stress, in which increasing prices lead to financial stress, and which then leads to more smoking to relief the stress.
In order to find support for these models, some statistical tests were done. However, after running these statistical tests on a linear regression model, all hypotheses needed to be rejected. The only significant factor that could be found was the effect that increasing the prices of tobacco would decrease the smoking intention when financial stress was the
mediator. This direct effect of the independent variable on the dependent variable was already found in a lot of researches, as described before. The role of financial stress was not supported by both models, and therefore no conclusions could be drawn on the effect of this variable.
