The UK demand for cigarettes 1954-1986, a double-hurdle approach

The double-hurdle perspective suggests that it is crucial to distinguish between per capita and per smoker consumption when estimating the demand for cigarettes. This paper presents a two equation model which identifies consumption and participation as two separate decisions. The model is estimated with annual data on U.K. cigarette expenditure and participation rates, highlighting the differing influence of prices, income and health scares on the participation rate and on smokers' demand for cigarettes.