Tobacco and alcohol: complements or substitutes? : a statistical Guinea Pig approach
AbstractThe question of whether two drugs – namely alcohol and tobacco – are used as complements or substitutes is of crucial interest if side-effects of anti-drug policies are considered. Numerous papers have empirically addressed this issue by estimating demand systems for alcohol and tobacco and subsequently calculating cross-price effects. However, this traditional approach often is seriously hampered by insufficient price-variation observed in survey data. We, therefore, suggest an alternative instrumental variables approach that statistically mimics an experimental study and does not rely on prices as explanatory variables. This approach is applied to German survey data. Our estimation results suggest that a reduction in tobacco consumption results in a reduction in alcohol consumption, too. It is shown theoretically that this implies that alcohol and tobacco are complements. Hence, we conclude that successful antismoking policies will not result in the unintended side-effect of an increased (ab)use of alcohol. --
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Bibliographic InfoPaper provided by Christian-Albrechts-University of Kiel, Department of Economics in its series Economics Working Papers with number 2006,18.
Date of creation: 2006
Date of revision:
interdependence in consumption; tobacco and alcohol; instrumental variables approach;
Other versions of this item:
- Harald Tauchmann & Silja Göhlmann & Till Requate & Chistoph M. Schmidt, 2006. "Tobacco and Alcohol: Complements or Substitutes? - A Statistical Guinea Pig Approach," RWI Discussion Papers, Rheinisch-WestfÃ¤lisches Institut fÃ¼r Wirtschaftsforschung 0052, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
- C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
- I12 - Health, Education, and Welfare - - Health - - - Health Production
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
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