The Demand for Tobacco in Post-Unification Italy
AbstractThis paper studies the demand for tobacco products in post-unification Italy. We construct a very detailed panel dataset of yearly consumption in the 69 Italian provinces from 1871 to 1913, and use it to estimate the Becker and Murphy (1988) rational addiction model. We find support for the presence of rational addiction; we also find that, in the period considered, tobacco was a normal good in Italy: its consumption increase with income. Subsequently, we separate the analysis of the components of the aggregate tobacco consumption (fine-cut tobacco, snuff, cigars and cigarettes), and tentatively suggest that habit formation was a stronger factor on the persistence of consumption than physical addiction. The paper ends by showing that the introduction of the Bonsack machine did not coincide with changes in the structure of the demand for tobacco, suggesting cost driven technological change.
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Bibliographic InfoPaper provided by Department of Economics, University of Leicester in its series Discussion Papers in Economics with number 12/13.
Date of creation: Jun 2012
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Other versions of this item:
- Carlo Ciccarelli & Gianni De Fraja, 2014. "The Demand for Tobacco in Post-Unification Italy," Quaderni di storia economica (Economic History Working Papers) 31, Bank of Italy, Economic Research and International Relations Area.
- Ciccarelli, Carlo & De Fraja, Gianni, 2012. "The Demand for Tobacco in Post-Unification Italy," CEPR Discussion Papers 9197, C.E.P.R. Discussion Papers.
- D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
- N33 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: Pre-1913
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-06-25 (All new papers)
- NEP-HEA-2012-06-25 (Health Economics)
- NEP-HIS-2012-06-25 (Business, Economic & Financial History)
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