Abstract
The interdependence between alcohol and cigarette consumption has received little attention in the literature on consumer behavior, particularly in transition economies such as China. The available literature generally addresses the interdependence between alcohol and cigarette consumption by estimating demand systems; however, in our case data on price variation and price information for a specific consumer are limited. A structural equation model is applied as an alternative to estimate the interdependence between alcohol and cigarette consumption with the absence of price variation, using parental consumption patterns as instrumental variables for offspring’s consumption behaviors. The empirical investigation is conducted by using a panel structure of the data from the China Health and Nutrition Survey (CHNS) over the period from 1993 to 2011. The results indicate that alcohol and cigarettes are complementary goods for men in China. When the demand for alcohol (cigarettes) increases, the demand for cigarettes (alcohol) will also increase, ceteris paribus. From a public health perspective, this implies that measures for reducing alcohol or cigarette consumption might have a double dividend effect on health.
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Notes
It requires normal distributed errors and assumes that any variable in the model affects the participation decision and consumption equation with the same sign (Greene 2012).
In terms of parental drinking behavior, parents who drink alcohol almost every day are defined as daily consumers; parents who drink alcohol three to four times a week or once or twice a week are defined as weekly consumers; parents who drink alcohol once or twice a month or no more than once a month are defined as monthly consumers.
We use the indicators because when using the actual amount of parental alcohol and cigarette consumption as instruments, most of the over-identification tests are rejected; this indicates that the actual amount of parental alcohol and cigarette consumption are actually correlated with the unobserved factors of the disturbances in structural equations.
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This research uses data from the China Health and Nutrition Survey (CHNS). We thank the National Institute of Nutrition and Food Safety, China Center for Disease Control and Prevention, Carolina Population Center (5 R24 HD050924), the University of North Carolina at Chapel Hill, the NIH (R01-HD30880, DK056350, R24 HD050924, and R01-HD38700) and the Fogarty International Center, NIH for financial support for the CHNS data collection and analysis files from 1989 to 2011 and future surveys, and the China-Japan Friendship Hospital, Ministry of Health for support for CHNS 2009. The authors also acknowledge the financial support from the Chinese Scholarship Council for conducting this research.
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Ren, Y., Castro Campos, B. & Loy, JP. Drink and smoke; drink or smoke? The interdependence between alcohol and cigarette consumption for men in China. Empir Econ 58, 921–955 (2020). https://doi.org/10.1007/s00181-018-1557-x
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DOI: https://doi.org/10.1007/s00181-018-1557-x