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The European Journal of Health Economics

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Open Access 01-04-2010 | Original Paper

Interactions between cigarette and alcohol consumption in rural China

Authors: Xiaohua Yu, David Abler

Published in: The European Journal of Health Economics | Issue 2/2010

Abstract

The objective of this paper is to analyze interdependencies between cigarette and alcohol consumption in rural China, using panel data for 10 years (1994–2003) for rural areas of 26 Chinese provinces. There have been many studies in which cigarette and alcohol consumption have been considered separately but few to date for China on interactions between the consumption of these two products. Taxes are often recommended as a tool to reduce alcohol and cigarette consumption. If cigarettes and alcohol are complements, taxing one will reduce the consumption of both and thus achieve a double public health dividend. However, if they are substitutes, taxing one will induce consumers to increase consumption of the other, offsetting the public health benefits of the tax. Our results indicate that the demands for both cigarettes and alcohol are very sensitive to the price of alcohol, but not to the price of cigarettes or to income. This suggests that taxes on alcohol can have a double dividend. On the other hand, an increase in cigarette taxes may not be effective in curbing cigarette or alcohol consumption in rural China.

Source: China Cigarette Corporation, http://www.cigarette.gov.cn//ycgk.php. Government revenue includes both local and central government revenues.

Source: China Statistical Yearbook 2005 (http://www.stats.gov.cn/english/statisticaldata/yearlydata/).

There have been studies of cigarette consumption alone [5‐7] and studies of alcohol consumption alone [4] that have used dynamic models.

A mu is a traditional Chinese measure of land area, with 15 mu equal to 1 ha.

An anonymous referee suggested including a variable to reflect the age structure in each province. However, data on age structure for rural areas at the provincial level are available only once every 10 years from the Census. Including this variable from the Census would not change the results because the first-order difference or subtraction of the mean would fully remove the effects of this variable.

To our knowledge, research similar to that of King and Epstein [31] has not been done for heavy smokers.

For this argument to be valid the market for hired farm labor must be limited in some way, or hired labor must be an imperfect substitute for farm household labor in production. Otherwise a farm household with more cropland would simply hire more labor to work that land. Because land in rural China is equally divided among peasants at the village level, hired labor is very rare.

Source: Rural Household Survey Statistics 2006.

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Title: Interactions between cigarette and alcohol consumption in rural China
Authors: Xiaohua Yu
David Abler
Publication date: 01-04-2010
Publisher: Springer-Verlag
Published in: The European Journal of Health Economics / Issue 2/2010
Print ISSN: 1618-7598
Electronic ISSN: 1618-7601
DOI: https://doi.org/10.1007/s10198-009-0157-2

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Interactions between cigarette and alcohol consumption in rural China

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