The History of an Inferior Good: Beer Consumption in Germany
AbstractThe question whether alcohol in general, and different types of alcoholic beverages in particular (e.g., beer) are normal or inferior goods is a heavily disputed issue within economics and health research. Based on recently developed theories of preference adjustment this paper argues that the answer to this question may not be independent of the level of income itself. It therefore applies a gradual switching regression approach to aggregate beer consumption data in Germany from 1957 to 2007. This method allows elasticities to change over time, without prior specifications of the time and speed of adjustments. Results suggest that an important behavioral change is present in the data, as elasticities of beer demand shifted considerably between 1965 and 2004. In particular, they demonstrate that over this period beer shifted from being a normal to being an inferior good.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Max Planck Institute of Economics, Evolutionary Economics Group in its series Papers on Economics and Evolution with number 2012-19.
Length: 18 pages
Date of creation: 31 Jan 2013
Date of revision:
Find related papers by JEL classification:
- D10 - Microeconomics - - Household Behavior - - - General
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-02-08 (All new papers)
- NEP-EUR-2013-02-08 (Microeconomic European Issues)
- NEP-HIS-2013-02-08 (Business, Economic & Financial History)
- NEP-IND-2013-02-08 (Industrial Organization)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ohtani, Kazuhiro & Kakimoto, Sumio & Abe, Kenzo, 1990. "A gradual switching regression model with a flexible transition path," Economics Letters, Elsevier, vol. 32(1), pages 43-48, January.
- Gallet, Craig A., 2007.
"The demand for alcohol: a meta-analysis of elasticities,"
Australian Journal of Agricultural and Resource Economics,
Australian Agricultural and Resource Economics Society, vol. 51(2), June.
- Craig A. Gallet, 2007. "The demand for alcohol: a meta-analysis of elasticities," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(2), pages 121-135, 06.
- Kenneth Clements & Wana Yang & Simon Zheng, 1997. "Is utility additive? The case of alcohol," Applied Economics, Taylor & Francis Journals, vol. 29(9), pages 1163-1167.
- E. A. Selvanathan & S. Selvanathan, 2004. "Economic and demographic factors in Australian alcohol demand," Applied Economics, Taylor & Francis Journals, vol. 36(21), pages 2405-2417.
- Benjamin Klein & Kevin M. Murphy & Lynne Schneider, 1981.
"Governmental REgualtion of Cigarette Health Information,"
UCLA Economics Working Papers
200, UCLA Department of Economics.
- Schneider, Lynne & Klein, Benjamin & Murphy, Kevin M, 1981. "Governmental Regulation of Cigarette Health Information," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 575-612, December.
- Durlauf, Steven N & Phillips, Peter C B, 1988.
"Trends versus Random Walks in Time Series Analysis,"
Econometric Society, vol. 56(6), pages 1333-54, November.
- Steven N. Durlauf & Peter C.B. Phillips, 1986. "Trends Versus Random Walks in Time Series Analysis," Cowles Foundation Discussion Papers 788, Cowles Foundation for Research in Economics, Yale University.
- Kiminori Matsuyama, 1999.
"The Rise of Mass Consumption Societies,"
1289, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Kiminori Matsuyama, 2000. "The Rise of Mass Consumption Societies," STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers 23, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Saroja Selvanathan & Eliyathamby Selvanathan, 2007. "Another look at the identical tastes hypothesis on the analysis of cross-country alcohol data," Empirical Economics, Springer, vol. 32(1), pages 185-215, April.
- Joni Hersch & W. Kip Viscusi, 1990. "Cigarette Smoking, Seatbelt Use, and Differences in Wage-Risk Tradeoffs," Journal of Human Resources, University of Wisconsin Press, vol. 25(2), pages 202-227.
- Ulrich Witt, 2001. "special issue: Learning to consume - A theory of wants and the growth of demand," Journal of Evolutionary Economics, Springer, vol. 11(1), pages 23-36.
- Wilhelm Ruprecht, 2005. "The historical development of the consumption of sweeteners - a learning approach," Journal of Evolutionary Economics, Springer, vol. 15(3), pages 247-272, 08.
- S. Selvanathan & E.A. Selvanathan, 2005. "Empirical Regularities in Cross-Country Alcohol Consumption," The Economic Record, The Economic Society of Australia, vol. 81(s1), pages S128-S142, 08.
- Donald G. Freeman, 2000. "Alternative Panel Estimates of Alcohol Demand, Taxation, and the Business Cycle," Southern Economic Journal, Southern Economic Association, vol. 67(2), pages 325-344, July.
- Blundell, Richard & Pashardes, Panos & Weber, Guglielmo, 1993. "What Do We Learn About Consumer Demand Patterns from Micro Data?," American Economic Review, American Economic Association, vol. 83(3), pages 570-97, June.
- Brenner, M. Harvey & Mooney, Anne, 1983. "Unemployment and health in the context of economic change," Social Science & Medicine, Elsevier, vol. 17(16), pages 1125-1138, January.
- Viscusi, W Kip & Evans, William N, 1990. "Utility Functions That Depend on Health Status: Estimates and Economic Implications," American Economic Review, American Economic Association, vol. 80(3), pages 353-74, June.
- James Fogarty, 2004. "The Own-Price Elasticity of Alcohol: A Meta-Analysis," Economics Discussion / Working Papers 04-01, The University of Western Australia, Department of Economics.
- Jon Nelson, 2010. "Alcohol advertising bans, consumption and control policies in seventeen OECD countries, 1975-2000," Applied Economics, Taylor & Francis Journals, vol. 42(7), pages 803-823.
- Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-72, June.
- Gallet, Craig A. & List, John A., 1998. "Elasticities of beer demand revisited," Economics Letters, Elsevier, vol. 61(1), pages 67-71, October.
- Bratina Danijel & Faganel Armand, 2008. "Forecasting the Primary Demand for a Beer Brand Using Time Series Analysis," Organizacija, De Gruyter Open, vol. 41(3), pages 116-124, May.
- Saroja Selvanathan, 2006. "How similar are alcohol drinkers? International evidence," Applied Economics, Taylor & Francis Journals, vol. 38(12), pages 1353-1362.
- Freeman, Donald G., 1999. "A note on 'Economic conditions and alcohol problems'," Journal of Health Economics, Elsevier, vol. 18(5), pages 659-668, October.
- Jon Nelson, 2003. "Advertising Bans, Monopoly, and Alcohol Demand: Testing for Substitution Effects using State Panel Data," Review of Industrial Organization, Springer, vol. 22(1), pages 1-25, February.
- Craig Gallet, 1999. "Gradual switching regression estimates of alcohol demand elasticities," Applied Economics Letters, Taylor & Francis Journals, vol. 6(6), pages 377-379.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Karin Serfling).
If references are entirely missing, you can add them using this form.