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Individual Heterogeneity and Censoring in Panel Data Estimates of Tobacco Expenditure

Jones, A.M. and Labeaga, J.M. (2002) Individual Heterogeneity and Censoring in Panel Data Estimates of Tobacco Expenditure. Journal of Applied Econometrics, 18 (2). pp. 157-177. ISSN 0883-7252

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A panel of households is used to test the rational addiction model of Becker et al. ([1994]). These data raise problems of measurement errors, censoring, and unobservable heterogeneity. We use sample separation information to exclude those households who never purchase tobacco. To deal with the remaining zeros we compare specifications based on infrequency of purchase and on censoring. GMM and system-GMM are used to deal with errors-in-variables and unobservable heterogeneity. Within-groups two-step, within-groups three-step GMM and Minimum Distance methods are used to allow for censoring. There is evidence that the rational addiction specification is sensitive to unobservable heterogeneity and censoring.

Item Type: Article
Institution: The University of York
Academic Units: The University of York > Economics and Related Studies (York)
Depositing User: York RAE Import
Date Deposited: 01 Jun 2009 11:19
Last Modified: 01 Jun 2009 11:19
Published Version: http://dx.doi.org/10.1002/jae.673
Status: Published
Publisher: John Wiley & Sons, Ltd
Refereed: Yes
Identification Number: 10.1002/jae.673
URI: http://eprints.whiterose.ac.uk/id/eprint/6424

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