The crowding-out effect of tobacco expenditure on health expenditure: Evidence from a Lower-middle-income Country.

Empirical studies show mixed results on the effect of tobacco expenditure on health expenditure. We find a crowding-out effect of tobacco expenditure on health expenditure of poor households in Vietnam. It implies that if the poor reduce their expenditure on tobacco, economic inequality in health expenditure can be reduced. Our findings suggest that reducing tobacco consumption of poor households can increase their health expenditure, therefore decreasing inequality in health expenditure. Different policies to reduce tobacco consumption such as tobacco taxation, smoke-free areas and tobacco advertisement bans should be strengthened.