Consumers' surplus and the demand for cigarettes

The demand for cigarettes in South Africa during the period 1970-89 was examined to help weigh the social cost versus the economic benefits of the tobacco industry. Per capita consumption is determined more by price and disposable income than advertising. The demand model was used to compute price and income elasticities and consumers' surplus. If habit overrules full information in smoking decisions, the consumers' surplus for cigarette consumption will still be significantly higher than the estimated health costs of smoking as computed by the South African Medical Research Council.