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The effect of the tobacco settlement and smoking bans on alcohol consumption

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  • Gabriel A. Picone

    (Department of Economics, University of South Florida, Tampa, USA)

  • Frank Sloan
  • Justin G. Trogdon

    (School of Economics, University of Adelaide, Australia)

Abstract

In the last few years, the price of cigarettes has increased considerably in the USA. In addition, a number of states have also imposed smoking bans. These increases in the cost and barriers to smoking have created a natural experiment to study relationships between smoking and drinking behaviors. In this study, we employ data from the first six waves of the Health and Retirement Survey (HRS) to analyze the effects of smoking bans and cigarette prices on alcohol consumption. We also test if past cigarette and alcohol consumption affect current alcohol consumption as predicted by co-addiction models. We estimate dynamic panel models using GMM estimators. Our approach allows us to obtain consistent estimates irrespective of the number of time periods. The three main findings of this study are: (1) there is positive reinforcement effect of past cigarette consumption on current alcohol consumption, (2) smoking bans reduce alcohol consumption and (3) there is a positive effect of cigarette prices on alcohol consumption. Copyright © 2004 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.930
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 13 (2004)
Issue (Month): 10 ()
Pages: 1063-1080

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Handle: RePEc:wly:hlthec:v:13:y:2004:i:10:p:1063-1080

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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References

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  1. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
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  10. Chaloupka, Frank J. & Warner, Kenneth E., 2000. "The economics of smoking," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 29, pages 1539-1627 Elsevier.
  11. Christian Dustmann & Frank Windmeijer, 2000. "Wages and the demand for health - a life cycle analysis," IFS Working Papers W99/20, Institute for Fiscal Studies.
  12. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
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  15. Elster, Jon, 1996. "Rationality and the Emotions," Economic Journal, Royal Economic Society, vol. 106(438), pages 1386-97, September.
  16. Wooldridge, Jeffrey M., 1995. "Selection corrections for panel data models under conditional mean independence assumptions," Journal of Econometrics, Elsevier, vol. 68(1), pages 115-132, July.
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Citations

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Cited by:
  1. Borghans, Lex & Golsteyn, Bart H.H., 2005. "Time Discounting and the Body Mass Index," IZA Discussion Papers 1597, Institute for the Study of Labor (IZA).
  2. Harald Tauchmann & Silja Lenz & Till Requate & Christoph Schmidt, 2013. "Tobacco and alcohol: complements or substitutes?," Empirical Economics, Springer, vol. 45(1), pages 539-566, August.
  3. Maurice J.G. Bun & Frank Windmeijer, 2009. "The Weak Instrument Problem of the System GMM Estimator in Dynamic Panel Data Models," Tinbergen Institute Discussion Papers 09-086/4, Tinbergen Institute.
  4. Requate, Till & Göhlmann, Silja & Tauchmann, Harald & Schmidt, Christoph M., 2006. "Tobacco and alcohol: complements or substitutes? : a statistical Guinea Pig approach," Economics Working Papers 2006,18, Christian-Albrechts-University of Kiel, Department of Economics.
  5. Kwabena Gyimah-Brempong, 2006. "Neighborhood income, alcohol availability, and crime rates," The Review of Black Political Economy, Springer, vol. 33(3), pages 21-44, March.
  6. Sara Markowitz & John Tauras, 2006. "Even For Teenagers, Money Does Not Grow on Trees: Teenage Substance Use and Budget Constraints," NBER Working Papers 12300, National Bureau of Economic Research, Inc.
  7. Sara Markowitz & John Tauras, 2009. "Substance use among adolescent students with consideration of budget constraints," Review of Economics of the Household, Springer, vol. 7(4), pages 423-446, December.
  8. Göhlmann, Silja & Requate, Till & Schmidt, Christoph M & Tauchmann, Harald, 2008. "Tobacco and Alcohol: Complements or Substitutes? A Structural Model Approach," CEPR Discussion Papers 6780, C.E.P.R. Discussion Papers.
  9. Dhaval Dave & Henry Saffer, 2007. "Risk Tolerance and Alcohol Demand Among Adults and Older Adults," NBER Working Papers 13482, National Bureau of Economic Research, Inc.
  10. Borghans, Lex & Golsteyn, Bart H.H., 2006. "Time discounting and the body mass index: Evidence from the Netherlands," Economics & Human Biology, Elsevier, vol. 4(1), pages 39-61, January.
  11. Michael T. Owyang & E. Katarina Vermann, 2012. "Where there’s a smoking ban, there’s still fire," Review, Federal Reserve Bank of St. Louis, issue July, pages 265-286.
  12. Maurice J.G. Bun & Frank Windmeijer, 2009. "The Weak Instrument Problem of the System GMM Estimator in Dynamic Panel Data Models," Tinbergen Institute Discussion Papers 09-086/4, Tinbergen Institute.
  13. Koksal, Aycan & Wohlgenant, Michael, 2013. "Pseudo Panel Data Estimation Technique and Rational Addiction Model: An Analysis of Tobacco, Alcohol and Coffee Demands," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150457, Agricultural and Applied Economics Association.
  14. Koksal, Aycan & Wohlgenant, Michael, 2013. "Interdependence of Tobacco and Alcohol Consumption: A Natural Experiment Approach," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150459, Agricultural and Applied Economics Association.
  15. Pierpaolo Pierani & Silvia Tiezzi, 2009. "Addiction and interaction between alcohol and tobacco consumption," Empirical Economics, Springer, vol. 37(1), pages 1-23, September.
  16. Nelson, Jon P., 2014. "Binge Drinking, Alcohol Prices, And Alcohol Taxes," Working Papers 164652, American Association of Wine Economists.
  17. Christopher Carpenter, 2007. "How Do Workplace Smoking Laws Work? Quasi-Experimental Evidence from Local Laws in Ontario, Canada," NBER Working Papers 13133, National Bureau of Economic Research, Inc.

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