Crowding-out effect of tobacco consumption on household food expenditures in Cameroon

Abstract

This study delves into the critical issue of household budgets in Cameroon, specifically focusing on the impact of tobacco expenditure. Tobacco use often represents a significant portion of a household’s financial resources, potentially leading to a phenomenon known as the “crowding-out effect.” This effect describes a situation where increased tobacco spending leads to a decrease in the budget allocated to other essential goods and services. To gain a deeper understanding of this phenomenon, this study employs a quantitative approach. The analysis utilizes data from a nationally representative household survey conducted in Cameroon during 2014 (ECAM4). A two-stage least squares (2SLS) technique is implemented to address a potential statistical issue known as endogeneity, which could otherwise skew the results. The study’s findings reveal a concerning trend: tobacco expenditure has a negative impact on the budget shares allocated to essential goods such as food, clothing, and household equipment. This negative impact appears to be particularly pronounced for male consumers within households. Based on these findings, the study suggested that implementing tobacco control policies could lead to significant improvements in household well-being and overall health status. These policies, by encouraging a reduction in tobacco use, could free up resources that could then be reallocated towards essential goods, ultimately improving household financial stability and health outcomes.