TY  - JOUR
AU  - Busch,Susan H.
AU  - Jofre-Bonet,Mireia
AU  - Falba,Tracy A.
AU  - Sindelar,Jody L.
TI  - Tobacco Spending and its Crowd-Out of Other Goods
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10974
PY  - 2004
Y2  - December 2004
UR  - http://www.nber.org/papers/w10974
L1  - http://www.nber.org/papers/w10974.pdf
N1  - Author contact info:
Susan Busch
School of Publc Health
Yale University
P.O. Box 208034
New Haven, CT 06520-8034
E-Mail: susan.busch@yale.edu

Mireia Jofre-Bonet
E-Mail: mireia.jofre-bonet@city.ac.uk

Tracy A. Falba
Economics Department
Duke University
213 Social Sciences
Box 90097
Durham, NC 27708
Tel: (919) 660-1806
E-Mail: tracy.falba@duke.edu

Jody L. Sindelar
Yale School of Public Health
Yale University School of Medicine
60 College Street, P.O. Box 208034
New Haven, CT 06520-8034
Tel: 203/785-5287
Fax: 203/785-6287
E-Mail: jody.sindelar@yale.edu
AB  - Smoking is an expensive habit. Smoking households spend, on average, more than $1000 annually on cigarettes. For households in which some members smoke, smoking expenditures crowd-out other purchases, which may affect other household members, as well as the smoker. We empirically analyze how expenditures on tobacco crowd out consumption of other goods, estimating the patterns of substitution between tobacco products and other expenditures. We use the Consumer Expenditure Survey (1995 to 2001), which we complement with regional price data, and state cigarette prices. We estimate a consumer demand system of expenditures on cigarettes, food, alcohol, housing, apparel, transportation, medical care and controls for socio-economic variables and other sources of observable heterogeneity. Descriptive data indicate that, compared to non-smokers, smokers spend less on housing. Results from the demand system indicate that as the price of cigarettes rises, households increase the quantity of food purchased, and, in some samples, reduce the quantity of apparel and housing purchased.
ER  -