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Crowding-out Effect of Tobacco Expenditure And Its Implications on Intra-Household Resource Allocation

Author

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  • Rijo M John

    (Indira Gandhi Institute of Development Research)

Abstract

The aim of this paper is to examine if tobacco consumption crowds-out consumption of basic needs and whether it has implications for nutrition intake and intra-household resource allocation in developing countries. In the process we also examine whether preference over other commodities for tobacco users and non users vary significantly. Using a nationally representative household sample survey from India for the year 1999-2000, we analyze the pattern of spending on various groups of commodities by the status of tobacco consumption of households. Average per capita per diem intake of nutrients such as calorie, fat and protein were reported to be lower among the high tobacco spending group of households vis-`a-vis the no-spending category. A system of quadratic conditional Engel curves was estimated for a set of ten broad groups of commodities. Separability between tobacco and most other goods was rejected. The results suggest that tobacco consuming households had lower consumption of certain commodities such as milk, clean fuels and entertainment which has direct bearing on mostly children and female members in the household suggesting possible gender effects and biases in intra-household resource allocation. Tobacco spending also found to have negative effects on household nutrition intake.

Suggested Citation

  • Rijo M John, 2006. "Crowding-out Effect of Tobacco Expenditure And Its Implications on Intra-Household Resource Allocation," Microeconomics Working Papers 22396, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:microe:22396
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    References listed on IDEAS

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    1. Michael Parti & Cynthia Parti, 1980. "The Total and Appliance-Specific Conditional Demand for Electricity in the Household Sector," Bell Journal of Economics, The RAND Corporation, vol. 11(1), pages 309-321, Spring.
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    5. Susan H. Busch & Mireia Jofre-Bonet & Tracy A. Falba & Jody L. Sindelar, 2004. "Tobacco Spending and its Crowd-Out of Other Goods," NBER Working Papers 10974, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Ramaele Moshoeshoe, 2012. "Consumer demand for alcoholic beverages and tobacco in Lesotho: A double-hurdle approach," Working Papers 315, Economic Research Southern Africa.
    2. Pu, Cheng-yun & Lan, Virginia & Chou, Yiing-Jenq & Lan, Chung-fu, 2008. "The crowding-out effects of tobacco and alcohol where expenditure shares are low: Analyzing expenditure data for Taiwan," Social Science & Medicine, Elsevier, vol. 66(9), pages 1979-1989, May.

    More about this item

    Keywords

    Tobacco; consumption; poverty; crowd-out; India.;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • R22 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Other Demand

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