An Analysis of Household’s Tobacco Consumption Decisions: Evidence from India

Rijo M John
JEL codes: 
Working Paper Series No. WP-2004-002

Tobacco products such as bidi and cigarette, both of which are smoked, cater to different 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 found
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 signifcant factors determining tobacco consumption habits of Indian households. The
effect of some of the factors on the probability of consumption differs 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.