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Estimation of individual demand for alcohol

  • Andrienko Yury

    ()

  • Nemtsov Aleksandr

    ()

Using individual data from RLMS, the longitudinal survey of the representative sample of the Russian population, we study static and dynamic models of demand for alcohol. We show the demand curve has traditional negative slope for any type of alcoholic drink: vodka, beer, and wine. We find substitution of moonshine for vodka with higher price on vodka and between vodka&beer with higher price on one of them. As a result of substitution vodka price has no impact on total ethanol consumption, while higher price on beer and wine reduce demand for ethanol. We also demonstrate that income has important effect on demand for alcoholic drinks. Risk to be drinker is rising with individual income. Higher income results in lower consumption of moonshine and in higher consumption of vodka, beer, and wine.

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Paper provided by EERC Research Network, Russia and CIS in its series EERC Working Paper Series with number 05-10e.

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Date of creation: 08 Sep 2005
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Handle: RePEc:eer:wpalle:05-10e
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  1. Frank J. Chaloupka, 1990. "Rational Addictive Behavior and Cigarette Smoking," NBER Working Papers 3268, National Bureau of Economic Research, Inc.
  2. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
  3. Gary S. Becker & Michael Grossman & Kevin M. Murphy, 1990. "An Empirical Analysis of Cigarette Addiction," NBER Working Papers 3322, National Bureau of Economic Research, Inc.
  4. Michael J. Moore & Philip J. Cook, 1995. "Habit and Heterogeneity in the Youthful Demand for Alcohol," NBER Working Papers 5152, National Bureau of Economic Research, Inc.
  5. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
  6. Zarkin, Gary A. & French, Michael T. & Mroz, Thomas & Bray, Jeremy W., 1998. "Alcohol use and wages: New results from the national household survey on drug abuse," Journal of Health Economics, Elsevier, vol. 17(1), pages 53-68, January.
  7. Bardsley, P. & Olekans, N., 1998. "Cigarette and Tobacco Consumption: Have Anti-Smoking Policies Made a Difference?," Department of Economics - Working Papers Series 615, The University of Melbourne.
  8. Gary Chamberlain, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Oxford University Press, vol. 47(1), pages 225-238.
  9. Frank J. Chaloupka & Kenneth E. Warner, 1999. "The Economics of Smoking," NBER Working Papers 7047, National Bureau of Economic Research, Inc.
  10. K.E. Quek, 1988. "The Demand of Alcohol in Canada: An econometric study," Economics Discussion / Working Papers 88-08, The University of Western Australia, Department of Economics.
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