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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

Author

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

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.

Suggested Citation

  • Meng, Yang & Brennan, Alan & Purshouse, Robin & Hill-McManus, Daniel & Angus, Colin & Holmes, John & Meier, Petra Sylvia, 2014. "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," Journal of Health Economics, Elsevier, vol. 34(C), pages 96-103.
    • Handle: RePEc:eee:jhecon:v:34:y:2014:i:c:p:96-103
    DOI: 10.1016/j.jhealeco.2013.12.006
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    12. Alan Brennan & Petra Meier & Robin Purshouse & Rachid Rafia & Yang Meng & Daniel Hill‐Macmanus & Colin Angus & John Holmes, 2015. "The Sheffield Alcohol Policy Model – A Mathematical Description," Health Economics, John Wiley & Sons, Ltd., vol. 24(10), pages 1368-1388, October.
    13. Jacinta C. Nwachukwu, 2017. "Tenure and Spending Within UK Households at the End of the Recent Recession," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 133(3), pages 1075-1104, September.
    14. Dehos, Fabian, 2020. "Legal access to alcohol and its impact on drinking and crime," Ruhr Economic Papers 884, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
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    19. Robert Pryce & Bruce Hollingsworth & Ian Walker, 2019. "Alcohol quantity and quality price elasticities: quantile regression estimates," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(3), pages 439-454, April.
    20. Rumman Khan, 2018. "Assessing cohort aggregation to minimise bias in pseudo-panels," Discussion Papers 2018-01, University of Nottingham, CREDIT.
    21. Santosh Kumar, 2016. "Price Elasticity of Alcohol Demand in India," Working Papers 1610, Sam Houston State University, Department of Economics and International Business.
    22. Xin Xu & Jayachandran N Variyam & Zhenxiang Zhao & Frank J Chaloupka, 2014. "Relative Food Prices and Obesity in U.S. Metropolitan Areas: 1976-2001," PLOS ONE, Public Library of Science, vol. 9(12), pages 1-22, December.
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    More about this item

    Keywords

    Alcohol demand; Elasticities; Cross price elasticities; Pseudo-panel;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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