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Smoking bans could also reduce alcohol consumption

14 April 2008. Source: CEPR (Center for Economic Policy Research)
DP6780 Tobacco and Alcohol: Complements or Substitutes? A Structural Model Approach

Author(s): Silja Göhlmann, Till Requate, Christoph M Schmidt, Harald Tauchmann

Smoking has been identified as a major cause of health problems, and severe restrictions have been introduced in an effort to reduce consumption in the industrialized world. Smoking has recently been banned from public sector buildings and public transport in Germany, one of the last developed countries to implement such a policy, and a similar ban is being discussed for bars and restaurants, following in the footsteps of many other countries.
But will such restrictions simply encourage potential drug users to turn to other harmful substances, notably alcohol? Several papers have attempted to address this issue, but have, according to the authors of this study, suffered from an insufficient variation of prices across observation units. The authors of CEPR DP6780 attempt to solve this by suggesting an alternative instrumental-variables approach that mimics an experimental study and does not rely on prices as explanatory variables.
Using data from the 'Population Survey on the Consumption of Psychoactive Substances in Germany', collected a regular intervals between 1980 and 2003, the authors find that tobacco and alcohol are consumed as complements, rather than substitutes. A reduction in the consumption of tobacco, at least among males, leads to a moderate reduction in the consumption of alcohol.