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Cigarette smoking in Indonesia: examination of a myopic model of addictive behaviour

Author

Listed:
  • Hidayat, Budi
  • Thabrany, Hasbullah

Abstract

Using aggregated panel data taken from three waves of the Indonesian Family Life Survey (1993–2000), this article tests the myopic addiction behaviour of cigarette demand. Sensitivity analysis is done by examining a rational addiction behavior of cigarette demand. The results provide support for myopic addiction. The short- and long-run price elasticities of cigarette demand are estimated at −0.28 and −0.73 respectively. Excise taxes are more likely to act as an effective tobacco control in the long-run rather than a major source of government revenue.

Suggested Citation

  • Hidayat, Budi & Thabrany, Hasbullah, 2010. "Cigarette smoking in Indonesia: examination of a myopic model of addictive behaviour," MPRA Paper 30194, University Library of Munich, Germany, revised 17 May 2010.
  • Handle: RePEc:pra:mprapa:30194
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    File URL: https://mpra.ub.uni-muenchen.de/30194/1/MPRA_paper_30194.pdf
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    References listed on IDEAS

    as
    1. Baltagi, Badi H & Levin, Dan, 1986. "Estimating Dynamic Demand for Cigarettes Using Panel Data: The Effects of Bootlegging, Taxation and Advertising Reconsidered," The Review of Economics and Statistics, MIT Press, vol. 68(1), pages 148-155, February.
    2. Baltagi, Badi H. & Levin, Dan, 1992. "Cigarette taxation: Raising revenues and reducing consumption," Structural Change and Economic Dynamics, Elsevier, vol. 3(2), pages 321-335, December.
    3. Chaloupka, Frank J. & Warner, Kenneth E., 2000. "The economics of smoking," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 29, pages 1539-1627 Elsevier.
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    Citations

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    Cited by:

    1. Kazuki Kamimura, 2012. "Effectiveness of cigarette tax in Japan," Keio/Kyoto Joint Global COE Discussion Paper Series 2011-035, Keio/Kyoto Joint Global COE Program.
    2. M. Filippini & G. Masiero, 2012. "An empirical analysis of habit and addiction to antibiotics," Empirical Economics, Springer, pages 471-486.

    More about this item

    Keywords

    cigarette consumption; myopic addictive models; methodology for panel data; Indonesia;

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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