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Cigarette smoking in Indonesia: examination of a myopic model of addictive behaviour

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  • Hidayat, Budi
  • Thabrany, Hasbullah

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

  • Hidayat, Budi & Thabrany, Hasbullah, 2010. "Cigarette smoking in Indonesia: examination of a myopic model of addictive behaviour," MPRA Paper 30194, University Library of Munich, Germany, revised 17 May 2010.
    • Handle: RePEc:pra:mprapa:30194
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    References listed on IDEAS

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    Cited by:

    1. Andrew K.G. Tan & Steven T. Yen & Abdul Rahman Hasan, 2016. "Cigarette and Alcohol Expenditures in Malaysia: Implications for Anti‐Smoking and Drinking Policies," Asian Economic Journal, East Asian Economic Association, vol. 30(4), pages 401-421, December.
    2. M. Filippini & G. Masiero, 2012. "An empirical analysis of habit and addiction to antibiotics," Empirical Economics, Springer, vol. 42(2), pages 471-486, April.
    3. Eliason, Marcus & Johansson, Per & Nilsson, Martin, 2018. "Forward-looking moral hazard in social insurance: evidence from a natural experiment," Working Paper Series 2018:11, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    4. Kazuki Kamimura, 2012. "Effectiveness of cigarette tax in Japan," Keio/Kyoto Joint Global COE Discussion Paper Series 2011-035, Keio/Kyoto Joint Global COE Program.

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    More about this item

    Keywords

    cigarette consumption; myopic addictive models; methodology for panel data; Indonesia;
    All these keywords.

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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