We estimate tobacco demand in Italy following the rational addiction framework. Two empirical tests are per formed. The first uses a pseudo panel of data and follows the approach of Baltagi and Griffin. We obtain evidence of forward-looking behavior but implausible estimates of the discount rate. The second uses a time series of per capita tobacco expenditures. In this case the data support the theory. A simulation is also carried out to assess the effects of future permanent price changes on tobacco demand. The novelty here is that expected future consumption is estimated by ordinary least squares using past and future prices as regressors instead of taking actual consumption as is usually the case in empirical tests of the rational addiction model. Results show that announcements of future price changes may be effective in curbing tobacco demand.

Tiezzi, S. (2005). An Empirical Analysis of Tobacco Addiction in Italy. THE EUROPEAN JOURNAL OF HEALTH ECONOMICS, 6, 233-242.

An Empirical Analysis of Tobacco Addiction in Italy

TIEZZI, SILVIA
2005

Abstract

We estimate tobacco demand in Italy following the rational addiction framework. Two empirical tests are per formed. The first uses a pseudo panel of data and follows the approach of Baltagi and Griffin. We obtain evidence of forward-looking behavior but implausible estimates of the discount rate. The second uses a time series of per capita tobacco expenditures. In this case the data support the theory. A simulation is also carried out to assess the effects of future permanent price changes on tobacco demand. The novelty here is that expected future consumption is estimated by ordinary least squares using past and future prices as regressors instead of taking actual consumption as is usually the case in empirical tests of the rational addiction model. Results show that announcements of future price changes may be effective in curbing tobacco demand.
Tiezzi, S. (2005). An Empirical Analysis of Tobacco Addiction in Italy. THE EUROPEAN JOURNAL OF HEALTH ECONOMICS, 6, 233-242.
File in questo prodotto:
File Dimensione Formato  
fulltext.pdf

non disponibili

Tipologia: Post-print
Licenza: NON PUBBLICO - Accesso privato/ristretto
Dimensione 1.03 MB
Formato Adobe PDF
1.03 MB Adobe PDF   Visualizza/Apri   Richiedi una copia

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11365/26024
 Attenzione

Attenzione! I dati visualizzati non sono stati sottoposti a validazione da parte dell'ateneo