Does Household Spending on Education Get Effected

by Pattern of Tobacco and Alcohol Consumption?

SULAIMAN KM, International Institute for Population Sciences, Mumbai-400088
Introduction

 Education and heath are two of the three key dimension of human development. Education and health both
empowers people with better living standard. According to the human capital theory by Becker (1964) the
educational expenditure has been nub in the public policy debate. Education strive a direct effect upon
occupational status and is seen almost as a universal remedy to economic problems such as unemployment and
poverty.

 Larger investment on education built human capital and long term investment. However, the public spending on
education is low in India and household remain the major source of finance of education.

 Alcohol and tobacco are known as India’s giant killer. Household spending on tobacco and alcohol reduces
household’s ability to pay for education, when there is no disposable income than it is obvious that there will be
some crowding- out of other commodities.
Literature Review

 Tilak (2002) found that the household expenditures on education are sizeable; households from even lower
socio-economic background—Scheduled Castes, Scheduled Tribes, low income groups, households whose
primary occupation is not high in the occupational hierarchy in India.

 Busch et al. (2004) found that tobacco expenditure has crowd-out consumption of other goods, estimating the
patterns of substitution between tobacco product and other expenditure in US. The forgone cost for
consumption tobacco product is examined in the paper. The study estimated consumer demand system of
expenditure on tobacco, food, transport, health care, etc.

 Neufeld.K. J et al. (2004) found consumption of tobacco and alcohol has been higher in rural dwellers than
among the urban dwellers mainly among those people who lives in below poverty line and have no formal
education in India. In this study the author has shown the regular use of both tobacco and alcohol has an
inverse association with income quintile as income quintile decreases the consumption pattern tend to
increase, further he concludes that regular use of tobacco and alcohol may lead to more poverty in future.

 Rijo M John (2006) examined that tobacco consumption crowds- out the consumption of basic needs and he
further argued that it has implementation for nutrition intake and intra- household resource allocation in
developing countries.
Need for the Study

 Public spending on education is low in India. In that case, the household remain the major source of
finance on education and health.

 The consumption of tobacco and alcohol is high in India. The policies on consumption of tobacco and
alcohol varies across the states.

 Spending on tobacco and alcohol reduces household’s ability to spend on education

 Expenditure on tobacco and alcohol particularly affects the poor as they don’t have disposable income

Objective

To examine the variation in household spending on education by pattern of tobacco and alcohol
consumption and selected characteristics of households.
Data Source and Methodology

 The study utilizes the unit data from the consumption expenditure survey, 68th round, and schedule 1.0:
type 2 data, collected by National sample survey organization conducted during July 2011- June 2012. The
survey canvassed over 340 questions on consumption of a variety of goods and services including
household consumption of tobacco, alcohol, education and health.

 The methodology consists of using both bi-variate and multivariate analysis. Besides, composite variables
are constructed to understand the differentials in household pattern of consuming tobacco and alcohol,
socioeconomic and demographic factors of the household head. The mean expenditure on education and
health, tobacco and alcohol and mean percentage are reckoned by the household composition
Results
Conclusion

1. About half of the household in India are neither tobacco consuming nor alcohol consuming household.

2. The households consuming both tobacco and alcohol outwardly crowd-out both household spending on
education.

3. Household income is directly related with both education expenditure.

4. According to the finding of this study the tobacco consuming household is the poorest household in India.

5. The average household spending on education is 88 rupees followed by average household spending on
tobacco is 20 rupees and average household spending on alcohol is 16 rupees which is the least.

6. The only tobacco consuming households crowd-out 0.02 unit more than that of only alcohol consuming
households on household spending on Education.

Hence, we can conclude that the household spending on tobacco and alcohol in crowding-out household
spending on education.
THANK YOU