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Cigarette Smoking in Indonesia: Examination of a Myopic Model of Addictive Behaviour

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  • Budi Hidayat

    (Faculty of Public Health, the University of Indonesia, Kampus FKM UI, Building F 1th Floor, Depok 16424, Indonesia
    Poverty Reduction and Economic Management, the World Bank Office Jakarta, Jakarta Stock Exchange Building Tower 2, 12th Floor, Jl. Jend. Sudirman Kav. 52-53, Jakarta 12190, Indonesia)

  • Hasbullah Thabrany

    (Center for Health Economic and Policy Analyses Studies, Faculty of Public Health, the University of Indonesia, Kampus FKM UI, Building G 3th Floor, Depok 16424, Indonesia)

Abstract

Using aggregated panel data taken from three waves of the Indonesian Family Life Survey (1993–2000), this article tests the myopic addiction behaviour of cigarette demand. Sensitivity analysis is done by examining a rational addiction behavior of cigarette demand. The results provide support for myopic addiction. The short- and long-run price elasticities of cigarette demand are estimated at −0.28 and −0.73 respectively. Excise taxes are more likely to act as an effective tobacco control in the long-run rather than a major source of government revenue.

Suggested Citation

  • Budi Hidayat & Hasbullah Thabrany, 2010. "Cigarette Smoking in Indonesia: Examination of a Myopic Model of Addictive Behaviour," IJERPH, MDPI, vol. 7(6), pages 1-13, June.
    • Handle: RePEc:gam:jijerp:v:7:y:2010:i:6:p:2473-2485:d:8567
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    References listed on IDEAS

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