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Alcohol quantity and quality price elasticities: quantile regression estimates

Author

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  • Robert Pryce

    (University of Sheffield)

  • Bruce Hollingsworth

    (Lancaster University)

  • Ian Walker

    (Lancaster University)

Abstract

Many people drink more than the recommended level of alcohol, with some drinking substantially more. There is evidence that suggests that this leads to large health and social costs, and price is often proposed as a tool for reducing consumption. This paper uses quantile regression methods to estimate the differential price (and income) elasticities across the drinking distribution. This is also done for on-premise (pubs, bars and clubs) and off-premise (supermarkets and shops) alcohol separately. In addition, we examine the extent to which drinkers respond to price changes by varying the ‘quality’ of the alcohol that they consume. We find that heavy drinkers are much less responsive to price in terms of quantity, but that they are more likely to substitute with cheaper products when the price of alcohol increases. The implication is that price-based policies may have little effect in reducing consumption amongst the heaviest drinkers, provided they can switch to lower quality alternatives.

Suggested Citation

  • Robert Pryce & Bruce Hollingsworth & Ian Walker, 2019. "Alcohol quantity and quality price elasticities: quantile regression estimates," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(3), pages 439-454, April.
    • Handle: RePEc:spr:eujhec:v:20:y:2019:i:3:d:10.1007_s10198-018-1009-8
    DOI: 10.1007/s10198-018-1009-8
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    References listed on IDEAS

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    Cited by:

    1. Samira Rousselière & Gaëlle Petit & Thomas Coisnon & Anne Musson & Damien Rousselière, 2022. "A few drinks behind—Alcohol price and income elasticities in Europe: A microeconometric note," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(1), pages 301-315, February.
    2. Avdic, Daniel & von Hinke, Stephanie, 2021. "Extending alcohol retailers’ opening hours: Evidence from Sweden," European Economic Review, Elsevier, vol. 138(C).
    3. Tanja Laković & Ana Mugoša & Mirjana Čizmović & Gordana Radojević, 2019. "Impact of Taxation Policy on Household Spirit Consumption and Public-Finance Sustainability," Sustainability, MDPI, vol. 11(20), pages 1-15, October.
    4. Clements, Kenneth W. & Mariano, Marc Jim M. & Verikios, George & Wong, Berwyn, 2022. "How elastic is alcohol consumption?," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 568-581.
    5. Clare Beeston & Mark Robinson & Lucie Giles & Elinor Dickie & Jane Ford & Megan MacPherson & Rachel McAdams & Ruth Mellor & Deborah Shipton & Neil Craig, 2020. "Evaluation of Minimum Unit Pricing of Alcohol: A Mixed Method Natural Experiment in Scotland," IJERPH, MDPI, vol. 17(10), pages 1-12, May.
    6. Avdic, Daniel & von Hinke, Stephanie, 2021. "Extending alcohol retailers’ opening hours: Evidence from Sweden," European Economic Review, Elsevier, vol. 138(C).

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    More about this item

    Keywords

    Alcohol demand; Quantile regression; Quality elasticity;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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