Models of Irish tobacco consumption

Abstract

This paper estimates several econometric models of tobacco consumption, employing Irish annual time series data. The approaches examined include the recently developed rational addiction model and a two-component model that separates participation as a smoker from consumption by smokers. No evidence was found to favour the rational addiction model. The proportion of smokers seems unaffected by price or income, but shows a substantial downward trend related to health concerns. In contrast, consumption by smokers shows no such trend, but is affected by price with a relatively low price elasticity. The implications are discussed.