Impact of Tobacco Spending on Intra-Household Resource Allocation in Montenegro

This Policy Brief was written by the Institute for Socio-Economic Analysis (ISEA) in Montenegro. The policy brief examines the crowding-out impact of tobacco expenditures on household budget allocation to other commodities in Montenegro. The authors find smoking households in Montenegro spend less on essential commodities, such as some food items (e.g., cereals, fruits and vegetables, and dairy products), clothing, housing and utilities, education, and recreation. Meanwhile, smoking households spend more on bars and restaurants, alcohol, coffee, and sugary drinks. This effect was observed across household income groups, although with greater effect among the poorest households, thus threatening future development and earning potential of children in these families. These effects impact the greater economy as well, increasing inequality and hampering human capital development. The policy brief concludes by recommending that policymakers strengthen and accelerate tobacco control policies, including raising tobacco excise taxes and ensuring that smoke-free policies are implemented effectively.

A corresponding Working Paper can be found here.