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Drink and smoke; drink or smoke? The interdependence between alcohol and cigarette consumption for men in China

Yanjun Ren (), Bente Castro Campos () and Jens-Peter Loy ()
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Yanjun Ren: University of Kiel
Bente Castro Campos: Universidad Politécnica de Madrid
Jens-Peter Loy: University of Kiel

Empirical Economics, 2020, vol. 58, issue 3, No 2, 955 pages

Abstract: Abstract The interdependence between alcohol and cigarette consumption has received little attention in the literature on consumer behavior, particularly in transition economies such as China. The available literature generally addresses the interdependence between alcohol and cigarette consumption by estimating demand systems; however, in our case data on price variation and price information for a specific consumer are limited. A structural equation model is applied as an alternative to estimate the interdependence between alcohol and cigarette consumption with the absence of price variation, using parental consumption patterns as instrumental variables for offspring’s consumption behaviors. The empirical investigation is conducted by using a panel structure of the data from the China Health and Nutrition Survey (CHNS) over the period from 1993 to 2011. The results indicate that alcohol and cigarettes are complementary goods for men in China. When the demand for alcohol (cigarettes) increases, the demand for cigarettes (alcohol) will also increase, ceteris paribus. From a public health perspective, this implies that measures for reducing alcohol or cigarette consumption might have a double dividend effect on health.

Keywords: Alcohol and cigarette consumption; Structural model; Instrumental variable; China (search for similar items in EconPapers)
JEL-codes: D12 C36 I12 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s00181-018-1557-x

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