An Examination of the Cross-Price Effects of Alcohol and Cigarettes

Abstract

My thesis analyzes the cross-price\ud effects of alcohol and\ud cigarettes on different subpopulations. Specifically, I use a linear\ud probability model to look at the change in the probability that a\ud person drinks, smokes, drinks excessively and drinks\ud moderately in response to a change in the price of beer, wine,\ud and cigarettes. I also use OLS regression to look at the change\ud in the average number of drinks per drinking occasion and the\ud average number of drinks per month in response to a change in\ud the price of beer, wine, and cigarettes. Results suggest that beer\ud is a complement to cigarettes, whereas cigarettes are a\ud substitute for alcohol. Additionally, I find that wine is a substitute\ud for cigarettes