A Double-Hurdle Approach to Modelling Tobacco Consumption in Italy

David Aristei and Luca Pieroni

No 29/2007, Quaderni del Dipartimento di Economia, Finanza e Statistica from Università di Perugia, Dipartimento Economia

Abstract: This paper analyses the determinants of tobacco expenditures for a sample of Italian households. A Box- Cox double-hurdle model adjusted for heteroscedasticity is estimated to account for separate individual decisions concerning smoking participation and tobacco consumption and to correct for non-normality in the bivariate distribution of the error terms. Nested univariate and bivariate models are found to be excessively restrictive, supporting the adequacy of a generalized specification. Estimation results show that consumption decisions are significantly affected by income and demographic characteristics. In particular, income positively impacts tobacco expenditure, while participation probability substantially declines as age increases. The existence of significant gender differences in both smoking participation and tobacco consumption patterns is found, while high education and white collar occupation reduce the likelihood to smoke and tobacco expenditure levels. Single adult households have a lower probability of smoking initiation even if, conditional on smoking, they consume more. Finally, complementarity between tobacco and alcohol beverages suggests the necessity of joint public health strategies.

Keywords: tobacco consumption; double-hurdle models; limited dependent variables; Box-Cox transformation (search for similar items in EconPapers)
JEL-codes: C24 D12 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2007-03-15
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Journal Article: A double-hurdle approach to modelling tobacco consumption in Italy (2008)
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