Table 7:
Estimated coefficients of the ordinary least squares (OLS), instrumental variable (IV) and fixed effects (FE) regressions of Relative Income Price (RIP) of cigarettes with interactions of trend and brand types in Bangladesh, 2009-2015.
| OLS | IV | FE | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Coef. | Robust Std. Err |
P-value | Coef. | Robust Std. Err |
P-value | Coef. | Std. Err | P-value | |
| Tax | 0.55 | 0.03 | 0.00 | 0.69 | 0.10 | 0.00 | 0.49 | 0.02 | 0.00 |
| Interactions of brands and trend | |||||||||
| Low-price brands | |||||||||
| Wave 2 | 0.74 | 0.56 | 0.18 | 0.93 | 0.57 | 0.11 | 3.28 | 1.37 | 0.02 |
| Wave 3 | −0.02 | 0.37 | 0.96 | 0.63 | 0.43 | 0.15 | 0.89 | 0.96 | 0.35 |
| Wave 4 | −2.23 | 0.50 | 0.00 | −2.62 | 0.85 | 0.00 | −1.11 | 1.05 | 0.29 |
| Medium-price brands | |||||||||
| Wave 2 | −1.81 | 0.67 | 0.01 | −1.92 | 0.67 | 0.00 | −4.36 | 1.43 | 0.00 |
| Wave 3 | −2.97 | 0.68 | 0.00 | −5.13 | 1.16 | 0.00 | −3.27 | 1.08 | 0.00 |
| Wave 4 | −5.33 | 0.53 | 0.00 | −6.36 | 0.65 | 0.00 | −6.32 | 1.13 | 0.00 |
| High-price brands | |||||||||
| Wave 2 | −5.23 | 1.17 | 0.00 | −5.28 | 1.27 | 0.00 | −7.66 | 1.53 | 0.00 |
| Wave 3 | −6.44 | 1.17 | 0.00 | −9.02 | 1.49 | 0.00 | −7.65 | 1.22 | 0.00 |
| Wave 4 | −14.81 | 1.31 | 0.00 | −18.50 | 2.34 | 0.00 | −14.77 | 1.36 | 0.00 |
| Premium brands | |||||||||
| Wave 2 | −1.63 | 2.42 | 0.50 | −1.70 | 2.57 | 0.51 | −6.80 | 1.68 | 0.00 |
| Wave 3 | −5.59 | 2.74 | 0.04 | −7.94 | 3.25 | 0.02 | −12.74 | 1.44 | 0.00 |
| Wave 4 | −22.18 | 2.38 | 0.00 | −27.60 | 3.89 | 0.00 | −22.32 | 1.58 | 0.00 |
| Constant | 7.90 | 2.50 | 0.00 | 2.14 | 1.14 | 0.06 | 1.98 | 1.07 | 0.06 |
| Number of observations | 5882 | 5882 | 5882 | ||||||
| R-squared | 0.58 | 0.51 | 0.37 | ||||||
Notes:
The regression analysis controls for age, gender, education, occupation, socio-economic status, residence, type of cigarettes brands, and village fixed effects. The estimates for these control variables are suppressed for the brevity of presentation.
Reference categories include male, persons with 0 years of education, owner/tenant farmers, low socio-economic status, urban area of residence, low cigarette brands and Wave 1 (2009).
The standard errors of OLS estimates are adjusted for auto-correlation of error terms of multiple observations on the same individual.
The village variable is used as an instrument for tax in the IV estimation. The test statistics for exogeneity of the tax variable using the Durbin-Wu-Hausman test is statistically insignificant (Robust regression F(1,2552) = 2.04, p=0.1537) suggesting exogeneity. The adjusted R-sq from the first stage regression of tax is 0.9261 suggesting strong predictability of variations in tax using village level variation.
The age variable drops out of the FE regression due to perfect collinearity with the wave variables. Gender, socio-economic status and area of residence variables are time- invariant and hence drop out of the FE regression as well.