Prevalence and substitution effects in tobacco consumption: A discrete choice analysis of panel data

Knut Wangen and Erik Biorn

No C4-3, 10th International Conference on Panel Data, Berlin, July 5-6, 2002 from International Conferences on Panel Data

Abstract: This paper analyzes tobacco demand within a discrete choice framework. Using binomial and multinomial logit models with random effects, and an unbalanced panel data set of Norwegian households over a twenty year period, we first consider the decisions a) whether to smoke or not, and b) given the choice is to smoke, whether to smoke hand rolled or manufactured cigarettes. Next, we consider a multinomial logit framework, in which the households choose between no tobacco, only manufactured cigarettes, only hand rolled cigarettes, and a combination of manufactured and hand rolled cigarettes. In this process, we utilize the potential offered by panel data to investigate unobserved heterogeneity, which is crucial for commodities where consumers have different tastes and where users tend to become addicted. Using Maximum Likelihood in combination with bootstrap estimation of standard errors, we find that income and prices influence the 'type of tobacco choice probabilities' at least as strongly as the 'smoking/non-smoking probabilities'. Cet.par., an increase in the price of manufactured cigarettes could lead consumers to switch to hand rolled cigarettes, rather than quit smoking. Socio-demographic variables seem to be at least as important in explaining the discrete aspects of tobacco consumption as income and prices. Finally, we find significant unobserved household specific effects in the smoking pattern.

Keywords: Tobacco.; Discrete; choice.; Panel; data.; Logit; analysis.; Heterogeneity.; Bootstrapping (search for similar items in EconPapers)
JEL-codes: C33 C35 D12 I18 (search for similar items in EconPapers)
Date: 2002-03
New Economics Papers: this item is included in nep-dcm, nep-hea and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://econpapers.repec.org/cpd/2002/25_Wangen-Reidar.pdf (application/pdf)

Related works:
Working Paper: Prevalence and substitution effects in tobacco consumption: A discrete choice analysis of panel data (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpd:pd2002:c4-3

Access Statistics for this paper

More papers in 10th International Conference on Panel Data, Berlin, July 5-6, 2002 from International Conferences on Panel Data
Bibliographic data for series maintained by Sune Karlsson ().