Tobacco and Alcohol: Complements or Substitutes? - A Statistical Guinea Pig Approach

Arbeitspapier

The question of whether two drugs – namely alcohol and tobacco – are used as complements or substitutes is of crucial interest if side-effects of anti-drug policies are considered. 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 often is 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 to German survey data. Our estimation results suggest that a reduction in tobacco consumption results in a reduction in alcohol consumption, too. It is shown theoretically that this implies that alcohol and tobacco are complements. Hence, we conclude that successful antismoking policies will not result in the unintended side-effect of an increased (ab)use of alcohol.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: RWI Discussion Papers ; No. 52

Classification and Topics

• Classification: Wirtschaft ; Consumer Economics: Empirical Analysis ; Multiple or Simultaneous Equation Models: Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models ; Health Behavior
• Subject: Interdependence in consumption ; tobacco and alcohol ; instrumental variables approach ; Drogenkonsum ; Rauchen ; Alkoholkonsum ; Konsuminterdependenz ; Komplementärgut ; Instrumentalvariablen-Schätzmethode ; Schätzung ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Tauchmann, Harald ; Göhlmann, Silja ; Requate, Till ; Schmidt, Christoph M.
• Event: Veröffentlichung
• (who): Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)
• (where): Essen
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/18603