Baltagi, Badi H. (2007). On the use of panel data methods to estimate rational addiction models. Scottish Journal of Political Economy, 54(1)
This paper reviews some of the econometrics problems faced when estimating a rational addiction model of Becker and Murphy using panel data. This is illustrated with three empirical applications. The first application looks at cigarette consumption using macro panel data on American states over time. The second application looks at liquor consumption using macro panel data on American states over time. The third application uses micro-panel data on Russian alcohol consumption.
Scottish Journal of Political Economy
Baltagi, Badi H.