The Demand for an Illegal Commodity:a Case Study of Chang'aa Consumption in Nairobi's Mbotela Estate

Abstract

Economic crime is an area which has been accorded low research priority but this trend is changing due to increasing awareness of the important role played by such activities in the provision of goods and services and the distribution of income within controlled and/or regulated economies. The underground economy under' which all economic crimes fall, is a feature of virtually

all economies the world over. In Kenya, it includes activities prohibited by law, such as the production and consumption of chang'aa.

The trade in chang'aa is not a new phenomenon in the Kenyan economy though substantive studies have not been conducted in this area. Most studies on chang'aa consumption have been carried out by sociologists and the purpose of this paper is to study such consumption from an economic point of view.

The study assumed that the probability of an individual consuming chang'aa and the amount consumed are determined by his socio-economic characteristics like age, sex, level of education, income etc and his perception of both the risk of arrest and the health hazardness

inherent in chang'aa consumption. The probability was estimated using the modified version of the logit model while the demand for chang'aa was estimated by the ordinary least squares estimation

method.

For this purpose, primary data was collected from a sample of

100 heads of household in Mbotela Estate, Nairobi.

A finding of particular importance was that an increase in the level of perceived risk of arrest for chang'aa consumption decreases

the probability of an individual consuming chang'aa. Thus, there is scope for curbing chang'aa consumption through increased and improved law enforcement measures. Whether such measures would be cost-effecti is another matter and as we argue at the end, maybe a revision of the Chang'aa Prohibition Act is in order.