"As a cheaper form of tobacco, RYO has evoked stereotypes of older, heavily addicted smokers that are very different from the image young people wish to communicate," Hoek said.
"Young adults who use RYO tobacco face a dilemma. One the one hand, they want to smoke as cheaply as possible, but on the other, they don't want to be associated with negative stereotypes."
Researchers began the study in order to understand how young people "managed that tension".
"We found they associated positive attributes with RYO cigarettes - such as being more natural or 'organic', and less harmful. They also developed cigarette-rolling rituals and saw the sticks they created as personal creations that provided them with social cachet."
Otago's professor of public health, Richard Edwards, published a letter in medical journal BMJ in 2014 saying evidence showed RYO cigarettes "are at least as hazardous as any other type of cigarette" and pointing to animal research suggesting they were more addictive.
"Any notion that loose tobacco is more 'natural' is severely undermined by evidence that the concentration of additives is higher in loose tobacco, at about 18 per cent of dry weight, compared with 0.5 per cent for factory made cigarettes," he wrote in his letter.
"Some of these additives, including sweeteners such as honey, sugar, dextrose, and sorbitol, often at much higher concentrations than in factory-made cigarettes, potentially make the product more acceptable to children. The high concentration of other additives would probably surprise RYO cigarette smokers."
The researchers at Otago published their findings in the international journal Tobacco Control.
They called for policy-makers to address the widely held misperceptions RYO tobacco is more natural and less harmful than other cigarettes.
They said the Government needed to introduce differential tax increases on rolling tobacco and ensure there is no cost advantage to buy RYO tobacco.
"We need unattractively coloured rolling paper, and packaging used to contain rolling paper and filters should have to adopt standardised packaging which features an unappealing colour and large pictorial warnings," Hoek said.
Researchers argue that if future studies continue to find high rates of RYO use and false beliefs around RYO, particularly among youth and young adults, there would be grounds for banning RYO tobacco sales altogether.