Tobacco and Alcohol: Complements or Substitutes? A Structural Model Approach to Insufficient Price Variation in Individual-Level Data
Tauchmann H, Lenz S, Requate T, Schmidt C (2013)
Publication Language: English
Publication Type: Journal article
Publication year: 2013
Journal
Publisher: Springer Verlag (Germany)
Book Volume: 45
Pages Range: 539-566
DOI: 10.1007/s00181-012-0611-3
Abstract
The question of whether alcohol and tobacco are consumed as complements or substitutes is crucial for determining the side-effects of anti-smoking policies. Numerous papers have empirically addressed this issue by estimating demand systems for alcohol and tobacco, and subsequently calculating cross-price effects. However, this traditional approach is often seriously hampered by insufficient price variation observed in survey data. We, therefore, suggest an alternative instrumental variables approach that statistically mimics an experimental study and does not rely on prices as explanatory variables. This approach is applied by means of German survey data. Our estimation results suggest that a reduction in tobacco consumption results in a moderate reduction in alcohol consumption. It is demonstrated that this implies that alcohol and tobacco are complements. Hence, we conclude that successful anti-smoking policies will not result in the unintended side-effect of an increased (ab)use of alcohol. © 2012 Springer-Verlag.
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Germany (DE)How to cite
APA:
Tauchmann, H., Lenz, S., Requate, T., & Schmidt, C. (2013). Tobacco and Alcohol: Complements or Substitutes? A Structural Model Approach to Insufficient Price Variation in Individual-Level Data. Empirical Economics, 45, 539-566. https://dx.doi.org/10.1007/s00181-012-0611-3
MLA:
Tauchmann, Harald, et al. "Tobacco and Alcohol: Complements or Substitutes? A Structural Model Approach to Insufficient Price Variation in Individual-Level Data." Empirical Economics 45 (2013): 539-566.
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