Time inconsistency and alcohol sales restrictions

Marit Hinnosaar

European Economic Review, 2016, vol. 87, issue C, 108-131

Abstract: Restrictions on alcohol sales hours or days are commonly used tools in order to reduce alcohol consumption. However, a forward-looking consumer can buy in advance, and thereby mostly undo the impact of the restriction. I study whether time inconsistent consumer preferences can provide a justification for restrictions on alcohol sales time. I estimate a demand model, which allows a fraction of consumers to be time inconsistent, using scanner data of beer purchases and other shopping behavior. According to the estimation results, 16% of regular beer buyers, or only 3% of all consumers, behave as if they are time inconsistent. I find that in terms of consumer welfare, the sales restriction may be welfare improving, but is worse than increasing taxes.

Keywords: Behavioral economics; Time inconsistent preferences; Consumer demand; Alcohol; Public health policy (search for similar items in EconPapers)
JEL-codes: D03 D12 I18 L51 L66 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:87:y:2016:i:c:p:108-131

DOI: 10.1016/j.euroecorev.2016.04.012

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