An Analysis of household's tobacco consumption decisions: Evidence from India

Abstract

Tobacco products such as bidi and cigarette, both of which are smoked, cater to di erent kinds of households in India, and analyzing them separately may yield results that are useful for public policy. Hence, we analyze the consumption patterns, socio-economic distribution and the household choice of a variety of tobacco products across rural and urban India. Using a Multinomial Logit Model, we analyze the choice behavior of a household in deciding whether and which tobacco products to consume. Household level data from National Sample Survey in India for the year 1999-2000, which has information on 120,309 households, has been used for this purpose. We nd that most forms of tobacco consumption are higher among socially disadvantaged and low-income groups in the country. Variables such as education, sex ratio, alcohol and pan consumption were found to be signi cant factors determining tobacco consumption habits of Indian households. The e ect of some of the factors on the probability of consumption di ers for certain types of tobacco products, increasing some, and decreasing others. Addictive goods such as alcohol and pan were found to be complimentary to tobacco consumption.