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Individual heterogeneity and censoring in panel data estimates of tobacco expenditure

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Author Info
Andrew M. Jones (Department of Economics and Related Studies, University of York, York YO10 5DD, UK)
José M. Labeaga (UNED Department of Economics, C|Senda del Rey, 11, 28040-Madrid, Spain)

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Abstract

A panel of households is used to test the rational addiction model of Becker et al. (1994). These data raise problems of measurement errors, censoring, and unobservable heterogeneity. We use sample separation information to exclude those households who never purchase tobacco. To deal with the remaining zeros we compare specifications based on infrequency of purchase and on censoring. GMM and system-GMM are used to deal with errors-in-variables and unobservable heterogeneity. Within-groups two-step, within-groups three-step GMM and Minimum Distance methods are used to allow for censoring. There is evidence that the rational addiction specification is sensitive to unobservable heterogeneity and censoring. Copyright © 2002 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/jae.673
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Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

Volume (Year): 18 (2003)
Issue (Month): 2 ()
Pages: 157-177
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Handle: RePEc:jae:japmet:v:18:y:2003:i:2:p:157-177

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Fabrice Etilé, 2006. "Who does the hat fit? Teenager heterogeneity and the effectiveness of information policies in preventing cannabis use and heavy drinking," Health Economics, John Wiley & Sons, Ltd., vol. 15(7), pages 697-718. [Downloadable!]
  2. Pouliakas, Konstantinos & Panos, Georgios & Zangelidis, Alexandros, 2009. "The Inter-Related Dynamics of Dual Job Holding, Human Capital and Occupational Choice," MPRA Paper 16859, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  3. Badi H. Baltagi & Ingo Geishecker, 2006. "Rational Alcohol Addiction: Evidence from the Russian Longitudinal Monitoring Survey," Center for Policy Research Working Papers 81, Center for Policy Research, Maxwell School, Syracuse University. [Downloadable!]
    Other versions:
  4. David Aristei & Luca Pieroni, 2007. "A Double-Hurdle Approach to Modelling Tobacco Consumption in Italy," Quaderni del Dipartimento di Economia, Finanza e Statistica 29/2007, Università di Perugia, Dipartimento Economia, Finanza e Statistica. [Downloadable!]
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  5. José M. Labeaga & Mercedes Martos-Partal, 2007. "A Proposal to Distinguish State Dependence and Unobserved Heterogeneity in Binary Brand Choice Models," Working Papers 2007-02, FEDEA. [Downloadable!]
  6. David Aristei & Luca Pieroni, 2007. "Addiction, Social Interactions and Gender Differences in Cigarette Consumption," Working Papers 39, Università di Verona, Dipartimento di Scienze economiche. [Downloadable!]
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  7. Gabriel A. Picone & Frank Sloan & Justin G. Trogdon, 2004. "The effect of the tobacco settlement and smoking bans on alcohol consumption," Health Economics, John Wiley & Sons, Ltd., vol. 13(10), pages 1063-1080. [Downloadable!]
  8. Anne Bretteville-Jensen, 2006. "Drug Demand – Initiation, Continuation and Quitting," De Economist, Springer, vol. 154(4), pages 491-516, December. [Downloadable!] (restricted)
  9. Leandro M. Magnusson, 2008. "Inference in Limited Dependent Variable Models Robust to Weak Identification," Working Papers 0801, Tulane University, Department of Economics, revised Apr 2009. [Downloadable!]
  10. Rinaldo Brau & M. Lippi Bruni & Anna Maria Pinna, 2004. "Public vs private demand for covering long term care expenditures," Working Paper CRENoS 200408, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia. [Downloadable!]
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