Cigarette Expenditure and Its Effect on Human Resource Investment Allocation

Abstract

This study aims to analyze the expenditure of cigarettes on human resources. Human resource investment is measured using education and health spending. The model is based on an analysis of previous studies that show a bad effect of smoking on health and achievement. Until now, cigarettes still existed and can be consumed freely. However, on the other hand, several studies have shown the bad influence of cigarettes on the quality of human resources. Therefore, the author will discuss the issue of the relationship between cigarette spending and human resources in smokers' households. The authors use IFLS data to estimate the effect of cigarette spending on education spending and health spending. The data used are data from 2007 and 2014. The characteristics of the observed households are the same households in 2007 and 2014. Next, the authors estimate the model using OLS and FIXED. The results show that households with more cigarette spending will reduce spending on education. To find out more, the author makes two models based on the location of residence. More specific results show that household cigarette spending in rural areas will push health spending.

The Effects of Inequality on the Substitution of Essential Goods for Tobacco Smoking in South Africa

“…This is the case for the lowest and highest quantiles (Table 5), which correspond to the poorest and wealthiest population groups, respectively. This means that household heads devote less money to their children's education, indicating a potential intergenerational effect (Wang et al 2006;John 2008) in which tobacco expenditure has a long-term impact on human capital investment, economic development, and poverty growth (Oktavianti et al 2022).…”