Does tobacco spending crowd-out the household budget? Preliminary results using nationwide survey data

Kostakis, Ioannis (2020): Does tobacco spending crowd-out the household budget? Preliminary results using nationwide survey data.

Abstract

The aim of this paper is to examine the crowding out effect of tobacco spending on other household commodity groups. It uses a national representative household sample survey retrieved from Hellenic Statistical Authority for the year 2017. A system of conditional Engel curve formula was estimated for a set of 12 commodity groups based on Eurostat categorization. Results reveal that spending on tobacco leads to a household budget allocation having a negative effect on certain commodity groups such as food, clothes, health and durables and positive on communication, education and spending on hotels and restaurants. Policy implications suggest that a regressive policy recommendation that result a cut tobacco effect could lead to a better wellbeing and household health status with a more sustainable consuming behavior.

• Item Type: MPRA Paper
• Language: English
• Keywords: Tobacco; Crowd out; Greece; Expenditure
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics; D - Microeconomics > D1 - Household Behavior and Family Economics > D10 - General

References

Antonakakis, N., & Collins, A. (2015). The impact of fiscal austerity on suicide mortality: Evidence across the “Eurozone periphery.” Social Science and Medicine, 145(September), 63–78. https://doi.org/10.1016/j.socscimed.2015.09.033

Aristei, D., & Pieroni, L. (2008). A double-hurdle approach to modelling tobacco consumption in Italy. Applied Economics, 40(19), 2463–2476. https://doi.org/10.1080/00036840600970229

Bonu, S., Rani, M., Jha, P., Peters, D. H., & Nguyen, S. N. (2004). Household tobacco and alcohol use, and child health: An exploratory study from India. Health Policy. https://doi.org/10.1016/j.healthpol.2004.02.003

Bush, S.H., Jofre-Bonet, M., Falba, T.A., Sinderal, J.L. (2004). Burning a hole in the budget: tobacco spending and its crowd-out of the others. Applied Health Economics and Health Policy, 3(4), 263-272.

De Silva, V., Samarasinghe, D., & Hanwella, R. (2011). Association between concurrent alcohol and tobacco use and poverty. Drug and Alcohol Review, 30(1), 69–73. https://doi.org/10.1111/j.1465-3362.2010.00202.x

Efroymson, D., Ahmed, S., Townsend, J., Alam, S.M., Dey, A.R. and Saha, R. (2001). Hungry for tobacco: an analysis of the economic impact of tobacco consumption on the poor in Bangladesh.Tobacco Control, 10, 212e 217.

Escario, J.J & Molina, J.A. (2001), Why do European consumers smoke? Responses from the rational addiction model. International Journal of Consumer Studies, 25, 24-29.

Gupta, P. C., & Ray, C. S. (2003). Smokeless tobacco and health in India and South Asia. Respirology, 8(4), 419–431. https://doi.org/10.1046/j.1440-1843.2003.00507.x

Hickling, J.A & Miller, C.L (2008) Cigarette pack and advertising displays at point of purchase: community demand for restrictions. International Journal of Consumer Studies, 32, 574-578.

John, R. M. (2008). Crowding out effect of tobacco expenditure and its implications on household resource allocation in India. Social Science and Medicine, 66(6), 1356–1367. https://doi.org/10.1016/j.socscimed.2007.11.020

Krause, R.M (2009) Developing conditions for environmentally sustainable consumption: drawing insight from anti-tobacco policy. International Journal of Consumer Studies, 33, 285-292.

Neufeld, K. J., Peters, D. H., Rani, M., Bonu, S., & Brooner, R. K. (2005). Regular use of alcohol and tobacco in India and its association with age, gender, and poverty. Drug and Alcohol Dependence. https://doi.org/10.1016/j.drugalcdep.2004.08.022

Nicolas, A.L. & Dominguez, J.P. (2006) Policies for the prevention of cigarette consumption: the case of Spain. International Journal of Consumer Studies, 30, 271-277.

Rani, M., Bonu, S., Jha, P., Nguyen, S. N., & Jamjoum, L. (2003). Tobacco use in India: prevalence and predictors of tobacco and chewing in a national cross sectional household survey. Tobacco Control, 12(4), 1–8.

Schoretsaniti, S., Filippidis, F.T., Vardavas, C.I., Dimitrakaki, C., Behrakis, P., Connolly, G.N. & Tountas, Y. (2014). 5-Year trends in the intention to quit smoking amidst the economic crisis and after recently implemented tobacco control measures in Greece. Addictive Bahaviors, 39, 140-145.

Shah, S., & Vaite, S. (2002). Choosing tobacco over food: daily struggles for existence among the street children of Mumbai, India. In D. Efroymson (Ed.), Tobacco and poverty: Observation from India and Bangladesh,Canada:PATH.

Sindelar, J. L., & O’Malley, S. S. (2014). Financial versus health motivation to quit tobacco: A randomized field study. Preventive Medicine. https://doi.org/10.1016/j.ypmed.2013.10.008

Thomson, G. W., Wilson, N. A., O’Dea, D., Reid, P. J., & Howden-Chapman, P. (2002). Tobacco spending and children in low income households. Tobacco Control, 11(4), 372–375. https://doi.org/10.1136/tc.11.4.372

Wang, H., Sindelar, J. L., & Busch, S. H. (2006). The impact of tobacco expenditure on household consumption patterns in rural China. Social Science and Medicine, 62(6), 1414–1426. https://doi.org/10.1016/j.socscimed.2005.07.032

WHO. (2004). Tobacco and poverty. A vicious circle. https://doi.org/10.1007/BF01566787

Zhou, X., Su, Z., Deng, H., Xiang, X., Chen, H., & Hao, W. (2006). A comparative survey on alcohol and tobacco use in urban and rural populations in the Huaihua District of Hunan Province, China. Alcohol. https://doi.org/10.1016/j.alcohol.2006.07.003