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A double-hurdle approach to modelling tobacco consumption in Italy

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Aristei, David; Pieroni, Luca

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Abstract This paper analyses the determinants of tobacco expenditures for a sample of Italian households. A Box-Cox double-hurdle model adjusted for heteroscedasticity is estimated to account separate individual decisions concerning smoking participation and tobacco consumption and to correct for non-normality in the bivariate distribution of the error terms. Nested univariate and bivariate models are found to be excessively restrictive, supporting the adequacy of a generalized specification. Estimation results show that consumption decisions are significantly affected by income and demographic characteristics. In particular, income positively impacts tobacco expenditure, while participation probability substantially declines as age increases. The existence of significant gender differences in both smoking participation and tobacco consumption patterns is found, while high education and white collar occupation reduce the likelihood to smoke and tobacco expenditure levels. Single adult households have a lower probability of smoking initiation even if, conditional on smoking, they consume more. Finally, complementarity between tobacco and alcohol beverages suggests the necessity of joint public health strategies.
Classification Sociology of Economics; Economic Statistics, Econometrics, Business Informatics
Free Keywords double-hurdle models; tobacco consumption; limited dependent variables; Box-Cox transformation; C24; D12
Document language English
Publication Year 2008
Page/Pages p. 2463-2476
Journal Applied Economics, 40 (2008) 19
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)