# CigaretteDemand

##### U.S. Cigarette Demand Data

Determinants of cigarette demand for the 48 continental US States in 1995 and compared between 1995 and 1985.

- Keywords
- datasets

##### Usage

`data("CigaretteDemand", package = "ivreg")`

##### Details

The data are taken from the online complements to Stock and Watson (2007) and
had been prepared as panel data (in long form) in `CigarettesSW`

from the AER package (Kleiber and Zeileis 2008). Here, the data are provided by
state (in wide form), readily preprocessed to contain all variables needed for
illustrations of OLS and IV regressions. More related examples from Stock and
Watson (2007) are provided in the AER package in `StockWatson2007`

.
A detailed discussion of the various cigarette demand examples with R code
is provided by Hanck et al. (2020, Chapter 12).

##### Format

A data frame with 48 rows and 10 columns.

- packs
Number of cigarette packs per capita sold in 1995.

- rprice
Real price in 1995 (including sales tax).

- rincome
Real per capita income in 1995.

- salestax
Sales tax in 1995.

- cigtax
Cigarette-specific taxes (federal and average local excise taxes) in 1995.

- packsdiff
Difference in

`log(packs)`

(between 1995 and 1985).- pricediff
Difference in

`log(rprice)`

(between 1995 and 1985).- incomediff
Difference in

`log(rincome)`

(between 1995 and 1985).- salestaxdiff
Difference in

`salestax`

(between 1995 and 1985).- cigtaxdiff
Difference in

`cigtax`

(between 1995 and 1985).

##### References

Hanck, C., Arnold, M., Gerber, A., and Schmelzer, M. (2020).
*Introduction to Econometrics with R*. https://www.econometrics-with-r.org/

Kleiber, C. and Zeileis, A. (2008). *Applied Econometrics with R*. Springer-Verlag

Stock, J.H. and Watson, M.W. (2007). *Introduction to Econometrics*, 2nd ed., Addison Wesley.

##### See Also

##### Examples

```
# NOT RUN {
## load data
data("CigaretteDemand", package = "ivreg")
## basic price elasticity: OLS vs. IV
cig_ols <- lm(log(packs) ~ log(rprice), data = CigaretteDemand)
cig_iv <- ivreg(log(packs) ~ log(rprice) | salestax, data = CigaretteDemand)
cbind(OLS = coef(cig_ols), IV = coef(cig_iv))
## adjusting for income differences (exogenous)
cig_iv2 <- ivreg(log(packs) ~ log(rprice) + log(rincome) | salestax + log(rincome),
data = CigaretteDemand)
## adding a second instrument for log(rprice)
cig_iv3 <- update(cig_iv2, . ~ . | . + cigtax)
## comparison using heteroscedasticity-consistent standard errors
library("lmtest")
library("sandwich")
coeftest(cig_iv2, vcov = vcovHC, type = "HC1")
coeftest(cig_iv3, vcov = vcovHC, type = "HC1")
## long-run price elasticity using differences between 1995 and 1985
cig_ivdiff1 <- ivreg(packsdiff ~ pricediff + incomediff | incomediff + salestaxdiff,
data = CigaretteDemand)
cig_ivdiff2 <- update(cig_ivdiff1, . ~ . | . - salestaxdiff + cigtaxdiff)
cig_ivdiff3 <- update(cig_ivdiff1, . ~ . | . + cigtaxdiff)
coeftest(cig_ivdiff1, vcov = vcovHC, type = "HC1")
coeftest(cig_ivdiff2, vcov = vcovHC, type = "HC1")
coeftest(cig_ivdiff3, vcov = vcovHC, type = "HC1")
# }
```

*Documentation reproduced from package ivreg, version 0.5-0, License: GPL (>= 2)*