Factors affecting alcohol purchase decisions and expenditures: A sample selection analysis by ethnicity in Malaysia

Heckman's sample selection model was applied to data from the Malaysian Household Expenditure Survey 2004/2005 to examine the factors influencing the likelihood of purchasing and the amount spent on alcohol in Malaysia. Results of the marginal effects suggest that while socio-demographic factors are important determinants of household purchase decisions and expenditure levels on alcohol in Malaysia, the effects vary across ethnic groups. Specifically, although education had a significant but modest impact in reducing the probability of alcohol purchases and expenditure levels among ethnic Chinese households, this effect was not evident among the ethnic Indians and other races. While increasing household size lowered the likelihood of purchasing alcohol and its expenditure levels for all ethnic groups, the reinforcing effects of both income and gender were relevant only for ethnic Chinese and Indian households. Last, urban Indian households were less likely to purchase alcohol and spend less compared to rural Indian households.