The effect of tobacco expenditure on expenditure shares in South African households: A genetic matching approach

Crowding-out effect of tobacco consumption in Indonesia

BACKGROUND

Tobacco consumption is pervasive in Indonesia, with 6 out of 10 households in the country consuming tobacco. Smoking households, on average, divert a significant share (10.7%) of their monthly budget on tobacco products, which is higher than spending on staples, meat or vegetables. Nevertheless, evidence of the causal link between tobacco expenditure and spending on other commodities in Indonesia is limited.

OBJECTIVE

This study aims to estimate the crowding-out effects of tobacco spending on the expenditure of other goods and services in Indonesia.

METHOD

This research estimates the conditional Engel curve with three-stage least square regression, where the instrumental variable technique is applied to address the simultaneity of tobacco and total non-tobacco spending. The study employs a large-scale household budget survey from the Indonesian socioeconomic survey (Susenas) from 2017 to 2019, comprising over 900 000 households.

FINDING

Tobacco spending crowds out the share of a household's budget allocated for food, such as spending on staples, meat, dairy, vegetables and fruits. Moreover, tobacco spending also reduces the share of expenditure spent on non-food commodities, such as clothing, housing, utilities, durable and non-durable goods, education, healthcare and entertainment, although its effect is not as large as the crowding out on food. The analysis shows that the crowding-out effects of tobacco are observed across low-income, middle-income and high-income households. In addition, the simulation suggests that reducing tobacco expenditure will increase household spending on essential needs.

Impact of tobacco spending on intrahousehold resource allocation in Montenegro

BACKGROUND

The main goal of this study is to estimate the crowding out impact of tobacco expenditures on the household budget allocation to other mutually exclusive commodity groups in Montenegro.

METHODOLOGY

The analysis uses the Household Budget Survey data from 2005 to 2017 to estimate a system of Engel curves using a three-stage least squares approach. As the tobacco expenditure variable is endogenous to budget shares on other consumption items, instrumental variables were included to obtain consistent estimates.

RESULTS

Overall, the results confirm the existence of the crowding out effect of tobacco spending on various commodities, such as some food items (eg, cereals, fruits and vegetables and dairy products), clothing, housing and utilities, education and recreation while a positive effect of tobacco consumption was estimated on budget shares on bars and restaurants, alcohol, coffee and sugary drinks. These results are consistent throughout the income groups of households. The estimates indicate that an increase in tobacco expenditures leads to reduction in budget shares on essential goods, which is likely to have negative impacts on the household living standard.

CONCLUSIONS

Tobacco expenditure crowds out household spending on necessities, especially in case of the poorest households, thus increasing inequality, hampering human capital development and potentially causing long-term adverse effects on the households in Montenegro. Our results are similar to evidence from other low and middle-income countries. This paper contributes to the analysis of the crowding out effect of tobacco consumption, which was conducted for the first time in Montenegro.

Inequality of the crowding-out effect of tobacco expenditure in Colombia

In recent decades, policy initiatives involving increases in the tobacco tax have increased pressure on budget allocations in poor households. In this study, we examine this issue in the context of the expansion of the social welfare state that has taken place over the last two decades in several emerging economies. This study explores the case of Colombia between 1997 and 2011. In this period, the budget share of the poorest expenditure quintile devoted to tobacco products of smokers' households doubled. We analyse the differences between the poorest and richest quintiles concerning the changes in budget shares, fixing a reference population over time to avoid demographic composition confounders. We find no evidence of crowding-out of education or healthcare expenditures. This is likely to be the result of free universal access to health insurance and basic education for the poor. For higher-income households, tobacco crowds out expenditures on entertainment, leisure activities, and luxury expenditures. This finding should reassure policymakers who are keen to impose tobacco taxes as an element of their public health policy.

The Crowding-out Effect of Tobacco Expenditure on Health Expenditure: Evidence From a Lower-Middle-Income Country

INTRODUCTION

Poor people have remarkably lower health expenditures than rich people in Vietnam. According to the 2016 Vietnam Household Living Standard Survey (VHLSS), per capita health expenditure of the top quintile households is around 6 times higher than that of the bottom quintile households.

AIMS AND METHODS

We analyze economic inequalities in health expenditure using the concentration index approach and data from the VHLSS 2010-2016. Next, we use the instrumental-variable regression analysis to examine the crowding-out effect of tobacco expenditure on health expenditure. Finally, we use decomposition analysis to explore whether economic inequality in tobacco expenditure is associated with an economic inequality in health expenditure.

RESULTS

We find a crowding-out effect of tobacco expenditure on health expenditure of households. The share of health expenditure of households with tobacco spending is 0.78% lower than that of households without tobacco spending. It is estimated that a one-VND increase in tobacco expenditure results in a 0.18 Vietnamese Dong (VND) (95% CI: -0.30 to -0.06) decrease in health expenditure. There is a negative association between economic inequality in tobacco expenditure and economic inequality in health expenditure. This means that if the poor consume less tobacco, their expenditure on health can be increased, resulting in a decrease in inequality in health expenditure.

CONCLUSIONS

Findings from this study suggest that reducing tobacco expenditure could improve health care of the poor and reduce inequality in health care in Vietnam. Our study recommends that the government continuously increase the tobacco tax in order to effectively reduce tobacco consumption.

IMPLICATIONS

Empirical studies show mixed results on the effect of tobacco expenditure on health expenditure. We find a crowding-out effect of tobacco expenditure on health expenditure of poor households in Vietnam. It implies that if the poor reduce their expenditure on tobacco, economic inequality in health expenditure can be reduced. Our findings suggest that reducing tobacco consumption in poor households can increase their health expenditure, therefore, decreasing inequality in health expenditure. Different policies to reduce tobacco consumption such as tobacco taxation, smoke-free areas, and tobacco advertisement bans should be strengthened.

The Healthy Aging Adult South Africa report card: a systematic review of the evidence between 2013 and 2020 for middle-aged South African men and women

Due to the increasing non-communicable disease burden in Africa, several strategies that target the major lifestyle and physiological risk factors have been implemented to combat such diseases. The Healthy Aging Adult South Africa report card systematically reviews national and regional prevalence data of middle-aged South African adults (45-65 years) published between 2013 and 2020 on diet, physical activity, tobacco use and alcohol consumption, obesity, hypertension, dyslipidaemia and diabetes mellitus. Each indicator was assigned two grades, (1) based on the availability of prevalence data, and (2) based on whether policies have been proposed and implemented for the respective indicators. Alcohol consumption, obesity, hypertension and diabetes received an A grade for the availability of prevalence data. Tobacco use and diet received an A grade for policy and implementation. Gaps have been identified that need to be filled by future research focusing on continued surveillance of all indicators in order to inform and implement effective policies.

The effect of tobacco- and alcohol-control policies on household spending patterns in Kenya: An approach using matched difference in differences

This paper examines the effect of tobacco and alcohol control policies on tobacco and alcohol consumption patterns and the evolution of crowding-out effects on other household expenditure in Kenya. The current literature on crowding-out does not provide a defensible instrumental variable for a system of demand equations. This paper uses Matched Difference in Differences (MDID) as an alternative strategy and data from two nationally representative surveys in Kenya conducted ten years apart (2005/6 and 2015/16). We find that tobacco-control policies contributed to a decrease in the proportion of tobacco-consuming households between 2005 and 2015. Alcohol-control policies were only effective in reducing the proportion of alcohol-consuming households in the bottom quartile of the expenditure distribution. Overall, tobacco-consuming households spent less on education, communication, and some food items. Alcohol-consuming households also spent less on some food items, but expenditure on transportation was the only non-food item crowded out. Tobacco and alcohol control policies, when they result in reduced consumption of these products, can increase household expenditure on human capital development in the long run.