The Demand for Tobacco in Post-Unification Italy

45 Pages Posted: 14 Oct 2014

See all articles by Carlo Ciccarelli

Carlo Ciccarelli

University of Rome Tor Vergata - Faculty of Economics

Gianni De Fraja

Universita' di Roma; University of Nottingham; Centre for Economic Policy Research (CEPR)

Date Written: January 23, 2014

Abstract

This paper studies the demand for tobacco products in post-unification Italy. We construct a very detailed panel dataset of annual consumption in the 69 Italian provinces from 1871 to 1913, which is then used to estimate the demand for tobacco products. We find support for the Becker and Murphy (1988) rational addiction model. We also find that, in the period considered, tobacco was a normal good in Italy: aggregate tobacco consumption increased with income. Subsequently, we consider separately the four types of products which comprise aggregate tobacco (fine-cut tobacco, snuff, cigars, and cigarettes), and tentatively suggest that habit formation was a stronger factor in the persistence of consumption than physical addiction. The paper ends by showing that the introduction of the Bonsack cigarette rolling machine in the early 1890s did not coincide with changes in the structure of the demand for tobacco, suggesting cost-driven technological change.

Keywords: smoking, Italian Kingdom, rational addiction, panel data

JEL Classification: D11, N33, I18

Suggested Citation

Ciccarelli, Carlo and De Fraja, Gianni and De Fraja, Gianni, The Demand for Tobacco in Post-Unification Italy (January 23, 2014). Bank of Italy Economic History Working Paper No. 31, Available at SSRN: https://ssrn.com/abstract=2509760 or http://dx.doi.org/10.2139/ssrn.2509760

Carlo Ciccarelli (Contact Author)

University of Rome Tor Vergata - Faculty of Economics ( email )

Via Columbia n.2
Rome, rome 00100
Italy

Gianni De Fraja

Universita' di Roma ( email )

Dipartimento SEFEMEQ
Via Columbia n.2
Rome, Rome 00133
Italy

HOME PAGE: http://www.economia.uniroma2.it/docenti

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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