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The Demand for Tobacco in Post-Unification Italy

Author

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  • Carlo Ciccarelli

    ()

  • Gianni De Fraja

    ()

Abstract

This 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.

Suggested Citation

  • Carlo Ciccarelli & Gianni De Fraja, 2012. "The Demand for Tobacco in Post-Unification Italy," Discussion Papers in Economics 12/13, Department of Economics, University of Leicester.
  • Handle: RePEc:lec:leecon:12/13
    as

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    File URL: http://www.le.ac.uk/economics/research/repec/lec/leecon/dp12-13.pdf
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    Cited by:

    1. Ciccarelli, Carlo & Missiaia, Anna, 2014. "Business fluctuations in Imperial Austria's regions, 1867-1913: new evidence," LSE Research Online Documents on Economics 55963, London School of Economics and Political Science, LSE Library.
    2. Carlo Ciccarelli & Pierpaolo Pierani & Silvia Tiezzi, 2014. "Secular trends in tobacco consumption: the case of Italy, 1871-2010," Department of Economics University of Siena 700, Department of Economics, University of Siena.
    3. Carlo Ciccarelli & Jean Paul Elhorst, 2016. "A Spatial Diffusion Model with Common Factors and an Application to Cigarette Consumption," CEIS Research Paper 381, Tor Vergata University, CEIS, revised 31 May 2016.
    4. Francesco Giffoni & Matteo Gomellini, 2015. "Brain gain in the age of mass migration," Quaderni di storia economica (Economic History Working Papers) 34, Bank of Italy, Economic Research and International Relations Area.

    More about this item

    Keywords

    Smoking; Italian Kingdom; Rational Addiction; Panel Data;

    JEL classification:

    • 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

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