The Impoverishing Effect of Tobacco Use in Indonesia.

BACKGROUND: Smoking households in Indonesia diverted a significant share of their budget to tobacco. Tobacco expenditure is deemed unproductive, as it crowds out resources from essential commodities and increases health care expenditure driven by tobacco-induced diseases. Therefore, despite having adequate resources, some smoking families in Indonesia may spend less on basic needs, which inadvertently puts their standard of living below the poverty line. METHODS: Employing data from 2021 (March) Indonesia's Socioeconomic Survey (SUSENAS), this research aims to quantify the impoverishing effect of tobacco consumption in Indonesia, considering spending on tobacco and tobacco-attributable health care costs as unproductive expenditure. The de facto headcount poverty rate and poverty gap index are calculated by removing tobacco expenditures and tobacco-attributable health care expenditures from the household's total spending. RESULTS: Accounting for unproductive spending related to tobacco use, Indonesia's headcount poverty ratio in March 2021 would rise by 3.22 percentage points, equivalent to an additional 8.75 million people living below the poverty line. In addition, the poverty gap index would increase by 0.77 percentage points. The impoverishment effect of tobacco is larger among rural populations than their urban counterparts. Moreover, the impoverishment is mainly driven by direct tobacco spending rather than tobacco-attributable health care expenditure. CONCLUSIONS: Significant portions of Indonesia's population are exposed to secondary poverty due to tobacco use. A high level of cigarette spending among smoking households is the major source of the impoverishing effect of tobacco use. IMPLICATIONS: The study provides quantitative evidence of the true cost of smoking in Indonesia, where the de facto number of the poor population after accounting for tobacco-related spending is higher than what is published in the official statistics. The findings of this study support tobacco control policies in Indonesia, particularly to effectively reduce tobacco use and mitigate the impoverishing impact of tobacco use on low-income households.

Crowding-out effect of tobacco consumption in Indonesia.

BACKGROUND: Tobacco consumption is pervasive in Indonesia, with 6 out of 10 households in the country consuming tobacco. Smoking households, on average, divert a significant share (10.7%) of their monthly budget on tobacco products, which is higher than spending on staples, meat or vegetables. Nevertheless, evidence of the causal link between tobacco expenditure and spending on other commodities in Indonesia is limited. OBJECTIVE: This study aims to estimate the crowding-out effects of tobacco spending on the expenditure of other goods and services in Indonesia. METHOD: This research estimates the conditional Engel curve with three-stage least square regression, where the instrumental variable technique is applied to address the simultaneity of tobacco and total non-tobacco spending. The study employs a large-scale household budget survey from the Indonesian socioeconomic survey (Susenas) from 2017 to 2019, comprising over 900 000 households. FINDING: Tobacco spending crowds out the share of a household's budget allocated for food, such as spending on staples, meat, dairy, vegetables and fruits. Moreover, tobacco spending also reduces the share of expenditure spent on non-food commodities, such as clothing, housing, utilities, durable and non-durable goods, education, healthcare and entertainment, although its effect is not as large as the crowding out on food. The analysis shows that the crowding-out effects of tobacco are observed across low-income, middle-income and high-income households. In addition, the simulation suggests that reducing tobacco expenditure will increase household spending on essential needs.

Changes in Smoking Status and Behaviors After the First 10 Months of COVID-19 Pandemic in Indonesia.

INTRODUCTION: There remains inconclusive evidence on potential changes in smoking status and behaviors during the coronavirus disease 2019 (COVID-9) pandemic, especially in developing countries. AIMS AND METHODS: This study explores the direction of changes in smoking status and behaviors after 10 months of the COVID-19 pandemic in Indonesia as well as examining the association between economic shocks and changes in smoking behaviors. Primary data were gathered through a phone survey targeting productive-age mobile-phone users in Indonesia (n = 1082). Descriptive analysis was employed to determine changes in smoking status and behaviors 10 months into the pandemic, while logistic regression analysis was used to investigate how employment shocks, financial strain, COVID-19-related indicators, and demographic characteristics were associated with smoking behaviors of people who continue smoking. RESULTS: Respondents experiencing changes in smoking status were dominated by people who persistently smoked during the pandemic, while those who quit, relapsed, and started smoking, was extremely small. Nevertheless, a considerable portion of people who continue smoking adjusted their smoking behaviors: 40.3% reduced smoking intensity and 25.3% switched to lower-price cigarettes. Multivariable regression analysis revealed that, among people who continue smoking, those who experienced financial strain during the pandemic had higher odds of reducing smoking intensity, while those who switched to lower job status had higher odds of switching to cheaper cigarettes. CONCLUSIONS: The research has shown that smoking status and behaviors of people who continue smoking mostly remained unchanged after 10 months of the COVID-19 pandemic. Changes in employment and financial conditions during the pandemic were associated with modified smoking behaviors. IMPLICATIONS: This study is the first to determine the direction and analyze the factors of changes in smoking during the COVID-19 pandemic in Indonesia. This new understanding should help improve predicting the trends in smoking in future crises or pandemics in developing countries, specifically Indonesia. The discovered patterns on smokers' reaction to an exogenous shock may provide evidence to support tobacco control policies in Indonesia.

Macroeconomic impact of tobacco taxation in Indonesia.

BACKGROUND: A significant tobacco tax increase has long been advocated to reduce Indonesia's high smoking prevalence. However, implementing such a policy remains challenging due to the tobacco industry's argument that it would negatively impact the economy. OBJECTIVE: This study aims to provide a comprehensive estimate of the net impact of tobacco taxation on Indonesia's economy. METHOD: The impact of the tax hike on the economy is simulated through a change in cigarette demand and reallocation of household's budget and allocation government spending from additional tobacco tax revenue. Input-output analysis is employed to estimate the net effect of the tobacco tax rise on the total economic output, income and employment in Indonesia. FINDING: Increasing the tobacco tax would generate a net positive impact on the economy as it would increase economic output, household income and employment. The positive impact is mainly driven by government spending from additional revenue from increased tobacco taxes. Spending tax revenue using the current structure of government spending has the potential to generate the optimal economic effect. Increasing tobacco tax by 45% from the 2019 tax level would increase economic output, household income and employment by Rp84.2 trillion, Rp24.1 trillion and 400.3 thousand jobs, respectively.