Impact of Tobacco Use on Household Consumption in Pakistan

The Impact of Tobacco Use on

Household Consumption Patterns

in Pakistan


Executive Summary

Pakistan has comparably high rates of tobacco consumption and tobaccorelated illness and disease. In addition, consumption of tobacco constitutes a
sizable portion of household expenditure. High tobacco expenditure leads to
reduced spending on other basic needs and thus has direct bearing on
household welfare. Analysis of household spending patterns is therefore
important for understanding the opportunity cost of tobacco use.


The Impact of Tobacco Useon Household Consumption Patterns in Pakistan
The Impact of Tobacco Use
on Household Consumption Patterns
in Pakistan

This study is the first attempt to estimate the impact of tobacco use on
consumption patterns of households in Pakistan and complements existing
work on the crowding out effect of tobacco expenditures in developing
economies. It also explores how reductions in tobacco expenditure affect
intra-household resource allocation. The study is based on quantitative
methods by using data from the Pakistan Household Integrated Economic
Survey 2015Ȃ16.

The key findings of this analysis are the following:
Ȉ In Pakistan, tobacco-spending households spend nearly three
percent of their monthly budget on tobacco, and poor households
devote more of their budget to tobacco relative to rich households.

  • The study finds strong evidence of a crowding out effect in Pakistan,
    in which a reduction in tobacco expenditure leads to an increase in
    household spending on basic food items, health, education, housing,
    household durables, leisure, and other commodities.
  • The crowding out effect is more prominent in education and basic
    food among lower-income households, while education and housing
    are more affected among higher-income households.
  • The simulation analysis suggests that a reduction in tobacco
    expenditures by 50 percent would increase aggregate expenditures
    on the abovementioned commodity groups by about 18 percent. For
    lower-income households, the major share of this increase would be
    devoted to education (35 percent) and basic food (25 percent).


The findings of this study highlight the importance of tobacco control policies
in Pakistan to reducing tobacco consumption and freeing up household
resources for other spending such as food and education. Moreover, given
the tobacco-poverty link, the study also recommends that tobacco control
measures be integrated into the poverty reduction policies and programs.