Tauchmann, H., Lenz, S., Requate, Till and Schmidt, C. M. (2013) Tobacco and alcohol: complements or substitutes?. Empirical Economics, 45 (1). pp. 539-566. DOI 10.1007/s00181-012-0611-3.

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Abstract

The question of whether alcohol and tobacco are consumed as complements or substitutes is crucial for determining the side-effects of anti-smoking policies. 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 is often 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 by means of German survey data. Our estimation results suggest that a reduction in tobacco consumption results in a moderate reduction in alcohol consumption. It is demonstrated that this implies that alcohol and tobacco are complements. Hence, we conclude that successful anti-smoking policies will not result in the unintended side-effect of an increased (ab)use of alcohol.

Document Type:	Article
Additional Information:	Times Cited: 0 Tauchmann, Harald Lenz, Silja Requate, Till Schmidt, Christoph M.
Keywords:	Complements or Substitutes, Interdependence in consumption, Tobacco and alcohol, Insufficient price-Variation, Instrumental variables approach
Research affiliation:	Kiel University > Kiel Marine Science OceanRep > The Future Ocean - Cluster of Excellence Kiel University
Refereed:	Yes
Open Access Journal?:	No
Publisher:	American Medical Association
Projects:	Future Ocean
Date Deposited:	08 Jul 2014 09:55
Last Modified:	27 Aug 2019 10:20
URI:	https://oceanrep.geomar.de/id/eprint/25223

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