Crowding-Out and Impoverishing Effect of Tobacco in Mexico

This Report was written by the Centro de Investigación Económica y Presupuestaria A.C. (CIEP) in Mexico. The report 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. Researchers find that after deducting tobacco expenditure and the cost of tobacco-related disease, over 900,000 people are left with a disposable income below the extreme poverty line. This impoverishing effect is known as secondary poverty. The report concludes with recommendations for policy makers to reduce tobacco consumption and improve the economic wellbeing of households. 

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A Policy Brief based on the report can be found here and here.