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Price Elasticity of Alcohol Demand in India

Santosh Kumar

No 1610, Working Papers from Sam Houston State University, Department of Economics and International Business

Abstract: Using a household survey conducted in 2014, this study estimates price elasticity of demand for beer, country liquor, and spirits in India. Ordinary least square models were used to estimate the responsiveness in alcohol demand due to price change. We include a large number of control variables to adjust for potential confounding in the model. Inter-district variation in alcohol consumption is adjusted for by including district fixed-effects. Alcohol prices are negatively associated with demand for alcoholic beverages. The price elasticity of demand ranged from -0.14 for spirits to -0.46 for country liquor. Low level of education was positively associated with spirits consumption. The magnitude of elasticity varied by rural-urban, education, and gender. Results indicate a policy mix of price controls and awareness campaigns would be most effective in tackling the adverse effects of harmful drinking in India

Keywords: Price elasticity of demand; Alcohol demand; Public policy; India (search for similar items in EconPapers)
JEL-codes: D12 I18 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2016-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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