Estimation of own and cross price elasticities of alcohol demand in the UK—A pseudo-panel approach using the Living Costs and Food Survey 2001–2009

Yang Meng, Alan Brennan, Robin Purshouse, Daniel Hill-McManus, Colin Angus, John Holmes and Petra Sylvia Meier

Journal of Health Economics, 2014, vol. 34, issue C, 96-103

Abstract: The estimation of price elasticities of alcohol demand is valuable for the appraisal of price-based policy interventions such as minimum unit pricing and taxation. This study applies a pseudo-panel approach to the cross-sectional Living Cost and Food Survey 2001/2–2009 to estimate the own- and cross-price elasticities of off- and on-trade beer, cider, wine, spirits and ready-to-drinks in the UK. A pseudo-panel with 72 subgroups defined by birth year, gender and socioeconomic status is constructed. Estimated own-price elasticities from the base case fixed effect models are all negative and mostly statically significant (p<0.05). Off-trade cider and beer are most elastic (−1.27 and −0.98) and off-trade spirits and on-trade ready-to-drinks are least elastic (−0.08 and −0.19). Estimated cross-price elasticities are smaller in magnitude with a mix of positive and negative signs. The results appear plausible and robust and could be used for appraising the estimated impact of price-based interventions in the UK.

Keywords: Alcohol demand; Elasticities; Cross price elasticities; Pseudo-panel (search for similar items in EconPapers)
JEL-codes: C10 C21 C23 I12 I18 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:34:y:2014:i:c:p:96-103

DOI: 10.1016/j.jhealeco.2013.12.006

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