Alcohol consumption, censorship and misjudgement. Issue 49 (21st October 2018)

• Record Type: Journal Article
• Authors: Clements, Kenneth W.; Liu, Haiyan; Tarverdi, Yashar
• Is Part Of: Applied economics. Volume 50:Issue 49(2018)
• Page Start: 5269
• Page End: 5276
• Publication Date: 2018-10-21
• Subjects: Alcohol demand -- sample selection -- simulation -- censorship level misjudgement; D12 -- C34 -- C15; Economics -- Periodicals; 330
• DOI: 10.1080/00036846.2018.1486025
• Languages: English
• ISSNs: 0003-6846

Abstract

ABSTRACT: In the study of the economic determinants of alcohol consumption, there is an under-appreciated issue of sample selectivity as consumption is often not fully observed. Sample selectivity involves ignoring consumption below a censorship cut-off level. This article estimates a demand system for beer, wine and spirits with and without allowance for selectivity. Then using a simulation approach, it examines the impact of misjudgement in the censorship level on the estimated demand parameters. A mean squared error (MSE) criterion is suggested for determining the appropriate censorship level.