Determinant of Cigarettes Consumption on Poor Households in Regency of Situbondo, Indonesia

Abstract

Poverty was a pervasive problem in a sustainable manner not only in economic aspects but also in noneconomic aspects. In line with this phenomena, generally spending patterns of poor households was dominated by food and the rest is others need, like tobacco. The tobacco was a fancy commodity which being priority consumed by the poor household. This condition was huge worried due to it would neglect the expenditures for food and other primary needs. This study aims to analyze income and prices of goods complementary to cigarette consumption in poor households in the Situbondo regency. The data used is the cross section data collected through standard questionnaire. The observations and interviews were conducted to 380 poor households as samples are divided into proportionally, based on the number of poor households in 12 villages in Situbondo regency. The data will be analyzed using descriptive analysis of narrative and causal analysis using a Two Part Demand Model was developed by Cragg (1971). The first step model was using Probit analysis that was aimed to determine the probability of the households to smoke. Meanwhile the two-step model using Ordinary Least Square (OLS) method was applied especially for cigarette consumption households. The results of this study indicated income and price of complementary goods (such as sugar and coffee) were significantly influence to cigarette consumption. On the other hand price was not a significantly effect on the decision to smoke, but it had significantly effect to the quantity of cigarettes smoked. Higher cigarette expenditures will reduce spending on health and education.