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The impact of prices on alcoholic beverage consumption in Chile

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  • Daniel Araya
  • Guillermo Paraje

Abstract

Introduction and objective: Chile is among the countries with the highest alcohol consumption per capita in Latin America, but little has been done in the way of public policy and policy research to overcome this problem. The objective of the present study is to estimate demand elasticities (own-price, cross-price, expenditure and quality) for three groups of alcoholic beverages in Chile: spirits, wines, and beers. Data and methods: The study uses data from the VII Encuesta de Presupuestos Familiares (Family Budget Survey) 2011–2012 conducted by the National Institute of Statistics. Because of problems with the quality of the measurement units, hot-deck imputation method was used with the alcohol purchases that presented problems. To estimate the demand elasticities, the Almost Ideal Demand System (AIDS) method proposed by Deaton was used. Quality decisions were estimated for each beverage separately using an equation proposed by Deaton in the three-step AIDS. Results: The estimated elasticities were more inelastic for spirits (-0.14, P

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  • Daniel Araya & Guillermo Paraje, 2018. "The impact of prices on alcoholic beverage consumption in Chile," PLOS ONE, Public Library of Science, vol. 13(10), pages 1-15, October.
    • Handle: RePEc:plo:pone00:0205932
    DOI: 10.1371/journal.pone.0205932
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    References listed on IDEAS

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    1. Angus Deaton, 1991. "Price Elasticities from Survey Data: Extensions and Indonesian Results," International Economic Association Series, in: Marc Nerlove (ed.), Issues in Contemporary Economics, chapter 10, pages 253-283, Palgrave Macmillan.
    2. Troncoso-Valverde, Cristián, 2004. "Preference Shifts, Structural Breaks and the Domestic Demand for Chilean Wine," Revista de Economia e Sociologia Rural (RESR), Sociedade Brasileira de Economia e Sociologia Rural, vol. 42(3), January.
    3. Gallet, Craig A., 2007. "The demand for alcohol: a meta-analysis of elasticities," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(2), pages 1-15.
    4. Michael Grossman & Frank J. Chaloupka & Henry Saffer & Adit Laixuthai, 1993. "Effects of Alcohol Price Policy on Youth," NBER Working Papers 4385, National Bureau of Economic Research, Inc.
    5. Manning, Willard G. & Blumberg, Linda & Moulton, Lawrence H., 1995. "The demand for alcohol: The differential response to price," Journal of Health Economics, Elsevier, vol. 14(2), pages 123-148, June.
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    7. Rebecca R. Andridge & Roderick J. A. Little, 2010. "A Review of Hot Deck Imputation for Survey Non‐response," International Statistical Review, International Statistical Institute, vol. 78(1), pages 40-64, April.
    8. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
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    Cited by:

    1. Leandro Arozamena & Hernán Ruffo & Pablo Sanguinetti & Federico Weinschelbaum, 2024. "Taxing for Health in Latin America," Department of Economics Working Papers 2024_03, Universidad Torcuato Di Tella.
    2. Tanja Laković & Ana Mugoša & Mirjana Čizmović & Gordana Radojević, 2019. "Impact of Taxation Policy on Household Spirit Consumption and Public-Finance Sustainability," Sustainability, MDPI, vol. 11(20), pages 1-15, October.
    3. Arozamena Leandro & Ruffo Hernán & Sanguinetti Pablo & Weinschelbaum Federico, 2024. "Taxing for Health in Latin America," Asociación Argentina de Economía Política: Working Papers 4708, Asociación Argentina de Economía Política.

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