Expenditure Pattern, Poverty and Impact of Tobacco Expenditure on the Consumption of Essential Household Commodities in Nigeria: A Rural/Urban Context

Abstract

Smoking impacts the living standards of households in addition to its damaging consequences on the health status of households that use tobacco. Given a fixed household budget, the consumption of essential household commodities are affected by their decision to smoke or not, especially in low-income households. In this study, we carried out the analysis of household expenditure pattern, poverty levels and the impact of tobacco expenditure on household consumption of essential commodities using the Nigerian Harmonised National Living Standard Survey, 2010. We employed the Quadratic Almost Ideal Demand System (QUAIDS) under separable consumer utility and two-stage budgeting frameworks to establish if tobacco use causes substitution effect on other goods that are more beneficial to household welfare. The results show that the mean per capita household expenditure is higher among non-poor households compared to poor households. In contrast, a significantly higher mean per capita expenditure on alcoholic beverages, tobacco and narcotics was observed among extremely poor households suggesting complementarity between tobacco and alcohol. Also, extremely poor smoking households appear to spend more on medical care than non-smokers within the same poverty classification. Overall, poverty incidence was 68% and our model estimation showed that tobacco consumption is not separable from household consumption of some goods so that changes in tobacco expenditure affects spending on these commodities.