Crowding Out Effects of Alcohol Consumption Expenditure on Household Resource Allocation in Malawi

Abstract

The study used Quasi maximum likelihood estimation (QMLE) on a nationally representative household level data set to estimate the effect of alcohol consumption expenditure on a set of expenditure proportions of other commodities. The results indicate that, the low-income, including the rural population, spent proportionately more on alcohol than their well-off and urban counterparts. Furthermore, the consumption of alcohol crowded-out expenditures on consumer non-durable (food and beverages), durable (housing) and essential services (education). The crowding out of these expenditures clearly has negative impacts on the wellbeing of individuals within households and communities through misallocated household resources. The strong, unequivocal message coming out of the results obtained in this study is that certainly for poorer countries alcohol consumption is inimical to household poverty reduction.