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Habit formation and college students' demand for alcohol

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Author Info

  • Jenny Williams

    (Department of Economics, University of Melbourne, Parkville, Victoria, Australia)

Abstract

This research investigates whether the positive association between college students' current and high-school drinking is due to habit formation or whether it is solely due to the influence of unobserved individual characteristics that are correlated over time. The empirical investigation is based on individual level data from the 1997 and 1999 waves of the Harvard School of Public Health's College Alcohol Study (CAS). Amemyia's generalized least squares is used to address the heterogeneity issue in examining the relationship between past and current drinking. The results suggest that after controlling for correlation in unobserved characteristics that influence alcohol use, high-school drinking has a significant and positive impact on college drinking, indicating the existence of habit formation. Both structural evidence of habit formation and reduced form results reveal that stricter drunk driving laws faced while in high-school have a long lived effect, reducing drinking while in college. The results also highlight the importance of access to alcohol, both on campus and in the college neighborhood, as a determinant of college students' drinking behavior. Copyright © 2004 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.908
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Bibliographic Info

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

Volume (Year): 14 (2005)
Issue (Month): 2 ()
Pages: 119-134

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Handle: RePEc:wly:hlthec:v:14:y:2005:i:2:p:119-134

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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. Jenny Williams & Frank J. Chaloupka & Henry Wechsler, 2005. "Are There Differential Effects of Price and Policy on College Students'Drinking Intensity?," Contemporary Economic Policy, Western Economic Association International, vol. 23(1), pages 78-90, 01.
  2. Michael J. Moore & Philip J. Cook, 1995. "Habit and Heterogeneity in the Youthful Demand for Alcohol," NBER Working Papers 5152, National Bureau of Economic Research, Inc.
  3. 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.
  4. Grossman, Michael & Chaloupka, Frank J & Sirtalan, Ismail, 1998. "An Empirical Analysis of Alcohol Addiction: Results from the Monitoring the Future Panels," Economic Inquiry, Western Economic Association International, vol. 36(1), pages 39-48, January.
  5. Philip J. Cook & Michael J. Moore, 2001. "Environment and Persistence in Youthful Drinking Patterns," NBER Chapters, in: Risky Behavior among Youths: An Economic Analysis, pages 375-438 National Bureau of Economic Research, Inc.
  6. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
  7. Smith, Richard J & Blundell, Richard W, 1986. "An Exogeneity Test for a Simultaneous Equation Tobit Model with an Application to Labor Supply," Econometrica, Econometric Society, vol. 54(3), pages 679-85, May.
  8. Jenny Williams & Lisa Powell & Henry Wechsler, 2003. "Does alcohol consumption reduce human capital accumulation? Evidence from the College Alcohol Study," Applied Economics, Taylor & Francis Journals, vol. 35(10), pages 1227-1239.
  9. Michael Grossman & Frank J. Chaloupka & Henry Saffer & Adit Laixuthai, 1994. "Effects of Alcohol Price Policy on Youth," NBER Working Papers 4385, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Nelson, Jon P., 2014. "Binge Drinking, Alcohol Prices, And Alcohol Taxes," Working Papers 164652, American Association of Wine Economists.
  2. Jason Fletcher, 2012. "The Effects of First Occupation on Long Term Health Status: Evidence from the Wisconsin Longitudinal Study," Journal of Labor Research, Springer, vol. 33(1), pages 49-75, March.
  3. Lan Liang & Jidong Huang, 2008. "Go out or stay in? The effects of zero tolerance laws on alcohol use and drinking and driving patterns among college students," Health Economics, John Wiley & Sons, Ltd., vol. 17(11), pages 1261-1275.
  4. Thomas Demuynck & Ewout Verriest, 2013. "I’Ll Never Forget My First Cigarette: A Revealed Preference Analysis Of The “Habits As Durables” Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(2), pages 717-738, 05.
  5. Irina Grafova, 2007. "Your Money or Your Life: Managing Health, Managing Money," Journal of Family and Economic Issues, Springer, vol. 28(2), pages 285-303, June.
  6. Jason Fletcher, 2012. "Peer influences on adolescent alcohol consumption: evidence using an instrumental variables/fixed effect approach," Journal of Population Economics, Springer, vol. 25(4), pages 1265-1286, October.

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