Abstract:

The aim of this study is to perform a conditional demand estimation of tobacco expenditures by using Household Budget Surveys (HBA) for the years 2004 and 2019 in Turkey. In this way, the crowding out effect of tobacco expenditures in other product groups (food, health, education, clothing, transportation, entertainment, alcohol, housing and durable goods) is analyzed using the three-stage least squares (3SLS) method. Understanding the crowding out effect of tobacco expenditures is important so that policy makers can develop effective strategies to reduce tobacco consumption and promote more efficient and fair spending patterns. The findings reveal that while tobacco expenditures only crowded out food expenditures in 2004, in 2019 the crowding out effect includes food, entertainment and housing expenditures. In addition, it was observed that the crowding out effect differs according to income groups.