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Alcohol consumption, censorship and misjudgement

Author

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  • Kenneth W. Clements
  • Haiyan Liu
  • Yashar Tarverdi

Abstract

In the study of the economic determinants of alcohol consumption, there is an under-appreciated issue of sample selectivity as consumption is often not fully observed. Sample selectivity involves ignoring consumption below a censorship cut-off level. This article estimates a demand system for beer, wine and spirits with and without allowance for selectivity. Then using a simulation approach, it examines the impact of misjudgement in the censorship level on the estimated demand parameters. A mean squared error (MSE) criterion is suggested for determining the appropriate censorship level.

Suggested Citation

  • Kenneth W. Clements & Haiyan Liu & Yashar Tarverdi, 2018. "Alcohol consumption, censorship and misjudgement," Applied Economics, Taylor & Francis Journals, vol. 50(49), pages 5269-5276, October.
    • Handle: RePEc:taf:applec:v:50:y:2018:i:49:p:5269-5276
    DOI: 10.1080/00036846.2018.1486025
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    Cited by:

    1. Kenneth W. Clements & Yihui Lan & Haiyan Liu, 2020. "Understanding alcohol consumption across countries," Applied Economics, Taylor & Francis Journals, vol. 52(40), pages 4421-4439, August.

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