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Habit formation and college students' demand for alcohol

  • Jenny Williams

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

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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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
Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. Michael Grossman & Frank J. Chaloupka & Ismail Sirtalan, 1995. "An Empirical Analysis of Alcohol Addiction: Results from the Monitoring the Future Panels," NBER Working Papers 5200, National Bureau of Economic Research, Inc.
  2. Frank J. Chaloupka & Henry Wechsler, 1996. "Binge Drinking In College: The Impact Of Price, Availability, And Alcohol Control Policies," Contemporary Economic Policy, Western Economic Association International, vol. 14(4), pages 112-124, October.
  3. Michael Grossman & Frank J. Chaloupka & Henry Saffer & Adit Laixuthai, 1993. "Effects of Alcohol Price Policy on Youth," NBER Working Papers 4385, National Bureau of Economic Research, Inc.
  4. Amy M. Wolaver, 2002. "Effects Of Heavy Drinking In College On Study Effort, Grade Point Average, And Major Choice," Contemporary Economic Policy, Western Economic Association International, vol. 20(4), pages 415-428, October.
  5. 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.
  6. 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.
  7. Jenny Williams & Frank J. Chaloupka & Henry Wechsler, 2002. "Are There Differential Effects of Price and Policy on College Students' Drinking Intensity?," NBER Working Papers 8702, National Bureau of Economic Research, Inc.
  8. Ethel B. Jones & John D. Jackson, 1990. "College Grades and Labor Market Rewards," Journal of Human Resources, University of Wisconsin Press, vol. 25(2), pages 253-266.
  9. 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.
  10. 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.
  11. 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.
  12. 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.
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