The Determinants of Smoking Initiation - Empirical Evidence for Germany

This paper aims at analyzing the determinants of the decision to start smoking using data from the German Socio-Economic Panel (GSOEP). The data used is a combination of retrospective information on the age individuals started smoking and,by tracing back these individuals within the panel structure up to the point they started smoking, information on characteristics at the age of smoking initiation. In contrast to other papers, it is possible to control for the environment at the time of smoking onset that might have influenced the decision to start. Moreover, never-smokers can be distinguished from ex-smokers. I estimate discrete, but also continuous time hazard models. Results indicate that young higher educated individuals are less likely to start, whereas the hazard of starting among older individuals is not affected by education. Furthermore, parental smoking during the whole childhood significantly increases the probability to start. Almost no significant effects are found regarding parental education, labor market status and living in a large city. Price effects could not be identified, because in Germany prices did not vary during the last decades up to 2002.GSOEP, youths, discrete time hazard model, log-logistic duration analysis

Who Smokes and How Much? - Empirical Evidence for Germany

Smoking is associated with high economic costs, because it increases the risk and incidence of several illnesses. A promising instrument to reduce these costs is to decrease tobacco consumption by developing target group-oriented non-smoking campaigns. However, this purpose requires knowledge about the characteristics of the target group. Utilizing data from three waves of the Mikrozensus, this paper portrays the smoking population in Germany to ascertain the socio-demographic characteristics which are associated with (i) smoking prevalence and (ii) the conditional demand for cigarettes. The empirical results indicate that a target group-oriented non-smoking campaign should focus primarily on individuals with a lower level of education and income, singles, divorced or widowed individuals and unemployed, because these sub-groups of the population exhibit the highest smoking prevalence. Moreover, individuals with a lower level of education as well as singles, divorced or widowed individuals also tend to smoke more.Smoking, socio-demographic characteristics, Mikrozensus

Smoking in Germany: Stylized Facts, Behavioral Models, and Health Policy

It is well known that smoking causes severe adverse health effects, and it seems evident that governments are justified or even obliged to implement measures of tobacco control to mitigate these effects.Yet, as this paper argues with a distinct focus on Germany, the three most important and still largely open questions in the design and implementation of economic and health policy are, whether government action is justified at all, what behavioral patterns this policy should try to alter, and whether the policy measures chosen indeed exert any substantial effects on the targeted outcomes.We conclude that the case for control measures aiming at the prevention of smoking initiation among adolescents is indeed strong, but also that their proper design would benefit from a better understanding of behavioral issues and that their empirical evaluation requires (non-experimental) study designs that facilitate the identification of causal effects.Tobacco, tobacco control, rational addiction

The Educational and Professional Background of Central Bankers and its Effect on Inflation – An Empirical Analysis

We assume that central banks can control inflation so that inflation rates reflect the preferences of the central bank council.The hypothesis to be tested is that these preferences depend on the central bankers’ educational and/or professional background. In a panel data analysis for the euro area and eleven countries since 1973,we explain inflation first by the weights which the various educational and professional characteristics occupy in the central bank council and second by the education or profession of the median central bank council member. Our results indicate that, with regard to professional background, former members of the central bank staff as well as former bankers and businessmen have the strongest inflation aversion and that former trade unionists and politicians seem to have the highest inflation preference.As for the education of the council members, our results are less robust. However, if the median member of the central bank council has studied business, the inflation rate is significantly lower than if she has studied economics.Central Bank, Monetary policy, Interest groups

Gender Differences in Smoking Behavior

This paper investigates gender differences in smoking behavior using data from the German Socio-economic Panel (SOEP). We develop a Blinder- Oaxaca decomposition method for count data models which allows to isolate the part of the gender differential in the number of cigarettes daily smoked that can be explained by differences in observable characteristics from the part attributable to differences in coefficients. Our results reveal that the major part of the gender smoking differential is attributable to differences in coefficients indicating substantial differences in the smoking behavior between men and women rather than differences in characteristics.Blinder-Oaxaca decomposition, count data models, SOEP, smoking, gender differences

The Effects of Reference Pricing on Ex-factory Prices of Rx Drugs in Germany – A Panel Data Approach

This paper examines effects of reference pricing for prescription drugs in German social health insurance based on econometric panel data methods. We analyze the effect on ex-factory prices. Moreover, we investigate whether manufacturers adapt prices of their products not subject to reference pricing as a consequence of changes in reference prices of their products subject to reference pricing.We use a large panel data set of nearly all German prescription drugs on a monthly basis between October 1994 and July 2005. Altogether, the data comprise almost 4 million observations. They provide information on ex-factory prices, reference prices, manufacturers, type of prescription drug, and market entries and exits. Our results show that there is no full price adjustment:A 1%-change in reference prices leads to a 0.3%-change in market prices. Price adjustment, however, is fast, it mostly happens in the first month. Furthermore, the first introduction of a reference price reduces market prices of the affected products by approximately 14%. Finally, we observe a significant time effect which is positive in the market without reference prices and negative in that with reference price.Price elasticity, temporal development, fixed effects model

Tobacco and Alcohol: Complements or Substitutes? A Structural Model Approach

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-smoking 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 moderate reduction in alcohol consumption. It is shown theoretically 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.complements or substitutes, interdependence in consumption, tobacco and alcohol, insufficient price-variation, instrumental variables approach

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

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. --interdependence in consumption,tobacco and alcohol,instrumental variables approach

Tobacco and Alcohol: Complements or Substitutes? – A Structural Model Approach

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-smoking 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 moderate reduction in alcohol consumption. It is shown theoretically 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.Complements or substitutes, interdependence in consumption, tobacco and alcohol, insufficient price-variation,instrumental variables approach

Tobacco and Alcohol: Complements or Substitutes? - A Statistical Guinea Pig Approach

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.Interdependence in consumption, tobacco and alcohol, instrumental variables approach