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Demand for cigarettes: a mixed binary-ordered probit approach

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Abstract:

This study analyses the demand for cigarettes fitting observed zero outcomes with a trivariate model consisting of an equation for the starting smoking decision, an equation for the quitting decision, and an equation that models the level of cigarettes consumed. Five competing specifications are considered to explain level, with the ordered probit, which accommodates pile-ups of counts in the dependent variable, providing the best fit. Marginal effects of explanatory variables are calculated providing strong evidence of race and gender differences in consumption patterns. The estimated marginal effects are robust to alternative categorizations of the level of cigarettes.

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036840701704402

Affiliations: 1: Health Services Research, Chattanooga, TN 37402 2: Department of Economics, University of South Florida, Tampa, FL 33620-5500 3: Department of Agricultural Economics, 302 Morgan Hall, The University of Tennessee, Knoxville, TN 37996-4518, USA

Publication date: February 1, 2010

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