Tobacco substitution and the poor

Abstract

Tobacco control policies have effectively raised the price of cigarettes and other tobacco products. However, these price increases have been shown to disproportionately fall upon poorer households, with fewer resources. In this analysis, we provide an initial indication of the effect increased prices might have on household allocations, by considering substitution and complementation related to tobacco consumption. Our results show substitution between tobacco and most household consumption items, although elasticities tend to be highest amongst the poorest households.