Infrequency of Purchase, Individual Heterogeneity an and Rational Addiction in Single Households’ Estimates of Alcohol Consumption

Pierpaolo Pierani () and Silvia Tiezzi

Department of Economics University of Siena from Department of Economics, University of Siena

Abstract: A panel of Italian single households is used to test for rational addiction in alcohol consumption. These monthly consumption data raise problems of measurement errors and unobservable heterogeneity. To deal with the zeros in the dependent variable we adopt a specification based on infrequency of purchase. GMM estimators are used to deal with errors in variables and unobserved heterogeneity. There is evidence that alcohol consumers are actually forward-looking. Past consumption is also significant in explaining current consumption thus detecting the addictive nature of alcohol. Discount rates, the strength of addiction, short and long run price and income elasticities are significant and in line with the theoretical predictions. These results and the inclusion of a number of demographic and geographic characters deliver valuable information for public policy purposes and suggest significant differences driven by individual heterogeneity.

Keywords: rational addiction; infrequency of purchase; GMM (search for similar items in EconPapers)
JEL-codes: C23 D12 (search for similar items in EconPapers)
Date: 2010-11
New Economics Papers: this item is included in nep-hea
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://repec.deps.unisi.it/quaderni/604.pdf (application/pdf)

Related works:
Journal Article: Infrequency of Purchase, Individual Heterogeneity and Rational Addiction in Single Households’ Estimates of Alcohol Consumption (2011)
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:usi:wpaper:604

Access Statistics for this paper

More papers in Department of Economics University of Siena from Department of Economics, University of Siena Contact information at EDIRC.
Bibliographic data for series maintained by Fabrizio Becatti ().