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Hurdle Models of Alcohol and Tobacco Expenditure in South African Households

Author

Listed:
  • Marc Ground

    () (Department of Economics, University of Pretoria)

  • Steven F. Koch

    () (Department of Economics, University of Pretoria)

Abstract

Estimates of participation or expenditure elasticities depend upon the assumptions made regarding the observation of zero expenditure at the household level. This research examines two single-hurdle models across two commodities for which nearly two-thirds of the observations are zero. The research shows that one hurdle model consistently outperforms the other, and does so for intuitively appealing reasons.

Suggested Citation

  • Marc Ground & Steven F. Koch, 2007. "Hurdle Models of Alcohol and Tobacco Expenditure in South African Households," Working Papers 200703, University of Pretoria, Department of Economics.
  • Handle: RePEc:pre:wpaper:200703
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    References listed on IDEAS

    as
    1. Koch, Steven & Alaba, Olufunke, 2010. "On health insurance and household decisions: A treatment effect analysis," Social Science & Medicine, Elsevier, vol. 70(2), pages 175-182, January.
    2. Judith Streak & Derek Yu & Servaas van der Berg, 2008. "How invariant is South African child poverty to the choice of equivalence scale or poverty measure?," Working Papers 13/2008, Stellenbosch University, Department of Economics.
    3. Corné Van walbeek, 2006. "Industry Responses To The Tobacco Excise Tax Increases In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 74(1), pages 110-122, March.
    4. Matthew C. Farrelly & Jeremy W. Bray & Terry Pechacek & Trevor Woollery, 2001. "Response by Adults to Increases in Cigarette Prices by Sociodemographic Characteristics," Southern Economic Journal, Southern Economic Association, vol. 68(1), pages 156-165, July.
    5. Steve F Koch, 2005. "The Aid and Maid System: South African Household Data Pitfalls," Working Papers 24, Economic Research Southern Africa.
    6. Marc Ground & Steven f Koch, 2008. "Hurdle Models Of Alcohol And Tobacco Expenditure In South African Households," South African Journal of Economics, Economic Society of South Africa, vol. 76(1), pages 132-143, March.
    7. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007. "Enhanced routines for instrumental variables/GMM estimation and testing," CERT Discussion Papers 0706, Centre for Economic Reform and Transformation, Heriot Watt University.
    8. Lance, Peter M. & Akin, John S. & Dow, William H. & Loh, Chung-Ping, 2004. "Is cigarette smoking in poorer nations highly sensitive to price?: Evidence from Russia and China," Journal of Health Economics, Elsevier, vol. 23(1), pages 173-189, January.
    9. van der Berg, Servaas & Burger, Ronelle & Louw, Megan, 2007. "Post-Apartheid South Africa: Poverty and Distribution Trends in an Era of Globalization," WIDER Working Paper Series 057, World Institute for Development Economic Research (UNU-WIDER).
    10. John, Rijo M., 2008. "Crowding out effect of tobacco expenditure and its implications on household resource allocation in India," Social Science & Medicine, Elsevier, vol. 66(6), pages 1356-1367, March.
    11. Gregory J. Colman & Dahlia K. Remler, 2008. "Vertical equity consequences of very high cigarette tax increases: If the poor are the ones smoking, how could cigarette tax increases be progressive?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 27(2), pages 376-400.
    12. Pu, Cheng-yun & Lan, Virginia & Chou, Yiing-Jenq & Lan, Chung-fu, 2008. "The crowding-out effects of tobacco and alcohol where expenditure shares are low: Analyzing expenditure data for Taiwan," Social Science & Medicine, Elsevier, vol. 66(9), pages 1979-1989, May.
    13. James Banks & Richard Blundell & Arthur Lewbel, 1997. "Quadratic Engel Curves And Consumer Demand," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 527-539, November.
    14. Deaton, Angus S & Ruiz-Castillo, Javier & Thomas, Duncan, 1989. "The Influence of Household Composition on Household Expenditure Patterns: Theory and Spanish Evidence," Journal of Political Economy, University of Chicago Press, vol. 97(1), pages 179-200, February.
    15. Frederic Vermeulen, 2003. "Do smokers behave differently? A tale of zero expenditures and separability concepts," Economics Bulletin, AccessEcon, vol. 4(6), pages 1-7.
    16. Yatchew, Adonis & Sun, Yiguo & Deri, Catherine, 2003. "Efficient Estimation of Semiparametric Equivalence Scales with Evidence from South Africa," Journal of Business & Economic Statistics, American Statistical Association, vol. 21(2), pages 247-257, April.
    17. Cp Van Walbeek, 2002. "The Distributional Impact of Tobacco Excise Increases," South African Journal of Economics, Economic Society of South Africa, vol. 70(3), pages 258-267, March.
    18. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
    19. repec:aph:ajpbhl:10.2105/ajph.2006.090134_3 is not listed on IDEAS
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    Citations

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    Cited by:

    1. Koch, Steven & Alaba, Olufunke, 2010. "On health insurance and household decisions: A treatment effect analysis," Social Science & Medicine, Elsevier, vol. 70(2), pages 175-182, January.
    2. Steven F. Koch & Gauthier Tshiswaka-Kashalala, 2008. "Tobacco Substitution and the Poor," Working Papers 200832, University of Pretoria, Department of Economics.
    3. Adel Bosch and Steven F. Koch, 2014. "Using a Natural Experiment to Examine Tobacco Tax Regressivity," Working Papers 434, Economic Research Southern Africa.
    4. Jonathan Meer & Harvey S. Rosen, 2009. "Family Bonding with Universities," NBER Working Papers 15493, National Bureau of Economic Research, Inc.
    5. Ndoro, Jorine T. & Hitayezu, Patrick & Mudhara, Maxwell & Chimonyo, Michael, 2013. "Livelihood factors influencing market participation and supply volumes decisions among smallholder cattle farmers in the Okhahlamba Local Municipality, South Africa: Implications for agricultural exte," 2013 AAAE Fourth International Conference, September 22-25, 2013, Hammamet, Tunisia 160477, African Association of Agricultural Economists (AAAE).
    6. Yen, Steven T. & Yuan, Yan & Liu, Xiaowen, 2009. "Alcohol consumption by men in China: A non-Gaussian censored system approach," China Economic Review, Elsevier, vol. 20(2), pages 162-173, June.
    7. Ramaele Moshoeshoe, 2012. "Consumer demand for alcoholic beverages and tobacco in Lesotho: A double-hurdle approach," Working Papers 315, Economic Research Southern Africa.
    8. repec:eee:spomar:v:20:y:2017:i:5:p:455-467 is not listed on IDEAS
    9. Ogundari, Kolawole & Arifalo, Sadiat Funmilayo, 0. "Determinants of Household Demand for Fresh Fruit and Vegetable in Nigeria: A Double Hurdle Approach," Quarterly Journal of International Agriculture, Humboldt-Universität zu Berlin, vol. 52.

    More about this item

    JEL classification:

    • 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
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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