Module 2, Part 1: Estimating Demand for Cigarettes
Part 1 begins our discussion of demand estimation in the context of smoking. We’ll also introduce the idea of instrumental variables as a way to estimate causal effects when confronted with selection on unobservables.
Objectives
- Understand how
R Markdowncreates a PDF file - Explain some of the history of smoking in the U.S.
- Describe the empirical barriers to estimating demand curves
Activities
- Homework 1 review and discussion
- Begin working with CDC Tax Burden data
- Derive the instrumental variables estimate
- Define and explain the instrumental variable estimate as a ratio of a “reduced-form” to a “first-stage” estimate
Slides
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