The Effect of Tobacco and Alcohol Control Policies on Household Sending Patterns in Kenya: An Approach Using Matched Difference in Differences

Abel Otwori Nyagwachi (), Grieve Chelwa () and Corne van Walbeek ()
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Abel Otwori Nyagwachi: University of Cape Town
Grieve Chelwa: University of Cape Town
Corne van Walbeek: University of Cape Town

No 113, ERSA Working Paper Series from Economic Research Southern Africa

Abstract: This paper examines the effect of tobacco and alcohol control policies on tobacco and alcohol consumption patterns and the evolution of crowding-out effects on other household expenditure in Kenya. The current literature on crowding-out does not provide a defensible instrumental variable for a system of demand equations. This paper uses Matched Difference in Differences (MDID) as an alternative strategy and data from two nationally representative surveys in Kenya conducted ten years apart (2005/6 and 2015/16). We find that tobacco-control policies contributed to a decrease in the proportion of tobacco-consuming households between 2005 and 2015. Alcohol-control policies were only effective in reducing the proportion of alcohol-consuming households in the bottom quartile of the expenditure distribution. Overall, tobacco-consuming households had lower expenditure on education, communication, and some food items. Alcohol-consuming households also had lower expenditure on some food items, but expenditure on transportation was the only non-food item crowded out. Tobacco and alcohol control policies, when they result in reduced consumption of these products, can increase household expenditure on human capital development in the long run.

Keywords: Tobacco; Alcohol control; household spending (search for similar items in EconPapers)
JEL-codes: D12 H00 I12 (search for similar items in EconPapers)
Date: 2024-10
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Published in ERSA Working Paper Series, October 2024

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Persistent link: https://EconPapers.repec.org/RePEc:rza:ersawp:113

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