Crowding-Out Effect of Tobacco Consumption in North Macedonia (Policy Brief)

This Policy Brief was written by Analytica in North Macedonia. The policy brief assesses the effect of tobacco spending on households budgets in North Macedonia. Households spent 13.2% of their budget on tobacco in 2022, an increase from 10.3% in 2018. The study finds that this expenditure is associated with a reduction in spending on beneficial goods and services, including food, clothing, health, housing, and communication. This is especially harmful in low-income households, where tobacco spending crowds out spending on necessities like food, health, and housing. In middle-income households, tobacco expenditure is associated with a reduction in spending on furniture, education, and recreation, while in high-income households, it is associated with decreased spending on furniture and housing. On the other hand, tobacco spending increases spending on alcohol, entertainment, and dining out. The policy brief concludes with policy recommendations to strengthen tobacco control and raise tobacco taxes to reduce consumption and improve financial wellbeing of households. 

The corresponding Working Paper can be found here.