A Binary-Ordered Probit Model of Cigarette Demand

Panagiotis P. Kasteridis, Murat Munkin and Steven T. Yen

No 9862, 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: This study analyzes the demand for cigarettes fitting observed zero outcomes with a trivariate model consisting of an equation for the starting smoking decision, an equation for the quitting decision, and an equation that models the level of cigarettes consumed. Five competing specifications are considered to explain level, with the ordered probit, which accommodates pile-ups of counts in the dependent variable, providing the best fit. Marginal effects of explanatory variables are calculated providing strong evidence of race and gender differences in consumption patterns. The estimated marginal effects are robust to alternative categorizations of the level of cigarettes.

Keywords: Demand; and; Price; Analysis (search for similar items in EconPapers)
Pages: 30
Date: 2007
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea07:9862

DOI: 10.22004/ag.econ.9862

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