ABSTRACT
The aim of this study is to identify the relationship between smoking, health expenditures, and budget balance. For this purpose, a two-stage analysis has been performed. Firstly, in order to identify the relationship between these three variables, the Pedroni cointegration method is taken into consideration. In this scope, the data set of ten countries with the highest smoking rate is included. The second part of the analysis includes the identification of the appropriate strategies to reduce smoking. Within this framework, AHP methodology is considered to weigh the strategies. It is obtained that there is a strong and long-term relationship between smoking, health expenditure, and budget balance. This situation gives information that when the smoking rate increases in a country, health expenditures will be higher. Similarly, the increase in health expenditures also leads to a higher debt burden. Thus, it is obvious that the most appropriate strategy is to take action in order to reduce smoking. According to AHP results, it is also identified that additional tax is the most significant strategy to minimize smoking in these countries. On the other side, education has the second highest weight. It is determined that the most optimal strategy for reducing smoking is to increase the tax rate for cigarette sales.
