The Crowding-Out Effect of Tobacco Consumption Tobacco: Consumption Reduces Expenditure on Essential Goods

This Policy Brief was written by the Centro de Investigación Económica y Presupuestaria A.C. (CIEP) in Mexico. The policy brief examines the impact of tobacco consumption on overall household spending and the impoverishing effect of smoking. The findings show that tobacco expenditure reduces spending on health care, education, housing, and clothing. At the same time, it increases spending on food, entertainment, transport, and durable goods, as well as alcohol. This effect is especially significant for low-income households with limited budgets. The policy brief concludes with recommendations for policy makers to reduce tobacco consumption and improve the economic wellbeing of households. 

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A corresponding Report and additional Policy Brief can be found here and here.