Resource title

Tobacco and alcohol: complements or substitutes? : a statistical Guinea Pig approach

Resource image

image for OpenScout resource :: Tobacco and alcohol: complements or substitutes? : a statistical Guinea Pig approach

Resource description

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.

Resource author

Till Requate, Silja Göhlmann, Harald Tauchmann, Christoph M. Schmidt

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/22017

Resource license

Adapt according to the presented license agreement and reference the original author.