The impoverishing effect of tobacco expenditures

Tobacco consumption is a major source of health and financial burden, yet evidence on its association with household poverty remains limited. This study examines how tobacco-related expenditures are associated with both the incidence and depth of poverty in Albania. Using nationally representative data from the Household Budget Survey, we estimate poverty indicators under three alternative definitions of household resources: observed expenditure, expenditure net of tobacco spending, and expenditure net of both tobacco and smoking-attributable healthcare costs. The results show that accounting for tobacco-related expenditures is associated with higher poverty levels. Under the most comprehensive scenario, approximately 13,000 additional households (representing nearly 60,000 individuals, including over 10,000 children) fall below the poverty line because of related tobacco expenditures. The headcount ratio increases from about 27% to 29%, while the poverty gap widens by around 2% points. Complementary regression analysis further indicates that higher tobacco expenditure shares are associated with a greater likelihood of being poor. These findings suggest that tobacco-related expenditures are closely associated with economic vulnerability and highlight the potential contribution of tobacco control policies to improving financial protection, reducing poverty-related vulnerability, and supporting broader public health and social development objectives.