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Alcohol quantity and quality price elasticities: quantile regression estimates

Robert Pryce (), Bruce Hollingsworth () and Ian Walker
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Robert Pryce: University of Sheffield
Ian Walker: Lancaster University

The European Journal of Health Economics, 2019, vol. 20, issue 3, 439-454

Abstract: 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.

Keywords: Alcohol demand; Quantile regression; Quality elasticity (search for similar items in EconPapers)
JEL-codes: D12 I18 (search for similar items in EconPapers)
Date: 2019
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