Impact of Tobacco Consumption on Food and Non-food Households Consumption Patterns: The Case of Indonesia

Abstract

This study aims to determine the impact of tobacco consumption on the consumption pattern of food and non-food consumption using the fixed effect model with panel data from the IFLS waves 3, 4, and 5 with 2000, 2007, and 2014 for each period with the household as the unit of analysis. This study uses panel data to control unobserved heterogeneity to overcome endogeneity problems and achieve better estimation results. This study concludes that tobacco consumption impacted changes in food and non-food consumption patterns. In all samples, tobacco consumption decreased the share of staple food, education, medical, and housing expenditure. For the low-income group, tobacco consumption decreases in the share of staple food consumption. In the middle-income group, tobacco consumption decreases in the share of healthcare expenditure. Meanwhile, tobacco consumption for the high-income group also decreases in the share of housing expenditure.