Tobacco Documents Online

...... ~r. Michael C. Henkel :iii~!!iii~.:::::i~ata Resources, Inc. iiii!~:i{~:~i!::iiiiiii~iu i t e 610 - Ga s L i g h t Towe r [~.~:~:~:~:~:~:35 Peachtree Street, N.E. A::£ lanta, Georgia 30303 iii:~:~:~:~:ii!iii:~:.i~ a r M i k e : July 8, 1982 This is to confirm our telephone discussion of July I, in which we agreed: To develop AGEMIX based on age groupings which are more consistent with government reports on incidence and rate, which provide the initial conditions for AGEMIX. The breaks will be: 12-17, 18-24, 25-34, 35-44, 45-64, and 65+. To develop our AGEMIX baseline using this scenario: • Incidence and rate for ages 12-17 and 18-24 are assumed to always be identical to the 1965 initial values. Our premise is that if nothing had changed since 1965, people would develop smoking behavior patterns as they did in 1965. • Since few people start smoking after age 24, we will assume that incidence remains fixed as a group ages past 24. (The falloff in incidence at older ages is presumed to be a function of the negative factors we are seeking to correlate to consumption). It appears that smoking rate follows a "life cycle" pattern. By comparing several periods of data, I have attempted to replicate this pattern in the age-specific rates supplied for 1965. We will assume that smokers always adopt rate according to their age. That the initial 1965 values which will drive the AGEMIX scenario are: CX 70-A INCIDENCE MALE £EMALE MALE RATE PER DAY FEMALE 12-17 11.9% 6.3% 19.0 18.5 18-24 51.3 36.0 25.0 23.1 25-34 60.7 43.8 28.0 24.8 35-44 58.2 43.7 28.8 24.9 45-64 51.9 32.0 28.1 24.3 65+ 28.5 9.6 22.8 20.7

' I [n [965, thes,~ [nitia| valttes would predict con:Bumption of 512,552 million cigarettes (compared to our shipment - based estimate of 512,667. Given our AGEMIX scenario and these I and R inputs, I estimate that our baseline would predict consumption of 692.2 billion in 1981, leaving about 68.4 billion to be explained by other factors. To simplify the AGEMIX equations by using current period population, rate, and incidence wherever possible, rather than a percentage of lagged values. Although the percentage approach tended to offset the errors which we know exist in the population estimates, I agree that it is better to be accurate wherever we can and at least know the likely source of any variances that occur. Using current period population requires population figures by individual years of age, which you have available for all necessary ages except age 64: we will assume that female 64 year-olds comprise 18.7% and males 18.2% of these respective 60-64 year totals, based on the 1965 government estimate. That when your bill arrives, we will hold it until the model is satisfactorily completed. } ..... I.am looking forward to our day together on July 12 to go over {i::i::!i:.;:ii!::ii:.ii::~rrent progress in detail. I am also holding the 16th open if ::i ....... we need more work session. I believe we were still to work out .~iiiiiii~:::.%:~::~ t e f o r o u r m a n a g e m e n t p r e s e n t a t i o n. ..... G~ll if I can help. ! "'::!ii~:" ::: 4i~!ii!i!i::D~ane S. Burrows ::. MARKETING DEVELOPMENT DEPARTMENT ~:. ~S B / c h .;:~. cC: Mr. P. g. Galyan ~: MDD Library (MDD#82-51303) RM0003739 CX 70-B