Crowding Out Effect of Tobacco Expenditure in Vietnam

This Policy Brief was written by Development and Policies Research Center (DEPOCEN) in Vietnam. The policy brief estimates current household spending on tobacco, as well as the impact that this has on other household expenditures. The authors find that households spend, on average, 1.92% of their budget on tobacco, with low- and middle-income households spending more. The share is relatively low as a result of increased availability and affordability of tobacco, which is due to rapid economic development in the country. Still, the authors find a crowding out effect in low-income households, with increased tobacco expenditure decreasing spending on education. In addition, spending on tobacco is related to increased spending on alcohol. The policy brief concludes that tobacco use is likely increasing inequality in Vietnam and recommends the implementation of tobacco control strategies.