The Demand for Vices in Malaysia: An Ethnic Comparison Using Household Expenditure Data

By Tan, Andrew K. G.; Yen, Steven T. et al. | Atlantic Economic Journal, December 2009 | Go to article overview

The Demand for Vices in Malaysia: An Ethnic Comparison Using Household Expenditure Data


Tan, Andrew K. G., Yen, Steven T., Nayga, Rodolfo M., Jr., Atlantic Economic Journal


Introduction

Recent statistics in Malaysia suggest that different types of vices are flourishing. For instance, there are currently about 3.1 million smokers aged 25-64 years, with a prevalence rate of 25.5%. In ethnic terms, 26.6% of Malays aged between 25-64 years are current smokers, followed by 21.2% Chinese, 16.2% Indian, 33.0% other Bumiputera (indigenous), and 22.7% other races (Ministry of Health Malaysia 2006). The latest figures on alcohol consumption in Malaysia indicate a prevalence rate of 12.2%, with about 1.5 million current drinkers aged 25-64 years. Ethnically, while only 0.4% of Malaysians aged between 25-64 years are current drinkers, 24.2% of Chinese, 21,1% of Indian, 37.6% of other Bumiputera, and 8.3% of those from other races are current drinkers (Ministry of Health Malaysia 2006). While total per capita alcohol consumption by adults (age [greater than or equal to] 15) is about 1.06 liters in 2003, this represents a 34% increase in volume from the previous decade. In catering to this demand, alcoholic beverage sales increased steadily by about 27% from $176 million in 2000 to $223 million in 2004 (WHO 2004).

There exists little data to link the growth of the gambling industry in Malaysia to any specific ethnic groups. Nonetheless, evidence points to the contribution by the non-Malay communities, since Malays in Malaysia, by virtue of being Muslims, are strictly forbidden to consume alcohol or partake in any form of gambling activities. However, such is the penchant for gambling by the non-Malay communities that the country ranks second worldwide in terms of lottery sales as a percentage of gross domestic product (2.81%) in 1997 (Garrett 2001). This is further evidenced by the fact that the Malaysian legalized gambling industry grew by more than 121%, from $1.4 billion in 1991 to $3.1 billion in 2003, while about $1.7 billion to $4.3 billion was transferred into illegal underground betting during the same period (Richardson 1992; John and Chelvi 2004). In addition, gaming tax revenues amounted to more than $1.8 billion between 2001 and 2004 (Bemama 2005).

Despite the growing significance of these vices, a careful scrutiny of certain aspects of the tobacco, alcohol, and gambling industries in Malaysia has largely been neglected. While a literature review shows a number of micro-level demand studies of such industries in Western cultures using disaggregated cross-sectional consumption data on tobacco (Nayga 1999; Yen 2005a, b), alcohol (Yen 1994) and gambling activities (Garrett 2001), little research exists on the demand for these vices in Malaysia. Although anecdotal evidence seems to point to those of Chinese ethnicity indulging in more smoking, drinking and gambling activities than other ethnic groups (Raylu and Oei 2004; Papineau 2005), perhaps largely due to religious and cultural differences, little is known about the specific socio-demographic determinants affecting its demand within the Chinese community in Malaysia.

As such, this study attempts to fill this research gap by using available household expenditure survey data to quantitatively examine the role of ethnicity on participation decisions and the amount of money spent on tobacco (cigarettes, cigars, and other tobacco related items), alcohol (hard liquor, beer, wine, toddy) and gambling (horse racing, lotteries, numbers forecasting) amongst households in Malaysia. J Given the unique co-existence of three distinct races amongst Malaysia's multi-ethnic population (Malay, Chinese, Indian, and a proportion consisting of various other races), the role of ethnicity is highlighted with the premise that different racial groups may exhibit differences in the demand for each of the vices. Understanding how such socio-demographic factors influence the likelihood of purchasing and the amount spent on these vice related products, while focusing on ethnic differences, is important to policymakers interested in identifying household characteristics that influence the demand for such products in Malaysia. …

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