smoking drinking and income in an effort to increase understanding of the alcohol income puzzle the finding that drinking appears to lead to higher income this paper presents maximum simulated likelihood estimates of a system of limited dependent variables governing smoking and drinking patterns and income with all else held constant moderate drinking is associated with 10 percent higher income and heavy drinking associated with 12 percent higher income than drinking abstention smoking is associated with larger effects on income than drinking single equation estimates suggest smokers earn 8 percent less than nonsmokers and the smoking penalty rises to 24 percent after correcting for endogeneity

is utility additive the case of alcohol the hypothesis of additive utility or preference independence is often applied to the demand for broad aggregates recent testing provides some evidence favourable to the hypothesis thus overturning the older results based on the standard asymptotic tests which are seriously biased against the null in small samples using data for seven countries and a variety of tests this paper shows that preference independence also cannot be rejected for more narrowly defined commodities beer wine and spirits the implications of the results for efficient taxation of alcoholic beverages are also explored

broadcast advertising and u s demand for alcoholic beverages quarterly data for 1977 1994 on alcohol consumption and advertising are used to estimate a differential demand system including explanatory variables for broadcast advertising and print advertising the model explains the growth rate of per capita consumption dependent on explanatory variables for prices real income demographic changes and real advertising by media and beverage empirical results also are reported for total consumption of pure alcohol the results for the three beverages and total alcohol indicate that advertising has little or no effect on demand the empirical evidence thus supports the notion that regardless of media advertising affects mainly brand shares

the demand for beer wine and spirits a survey of the literature the demand for alcohol literature is vast and much conflicting information about the nature of the demand for alcoholic beverages has been published this paper presents a survey of the literature and then uses the technique of meta regression analysis to establish insights into the nature of the demand for beer wine and spirits unlike previous meta studies of the demand for alcoholic beverages this study adjusts for the precision of each elasticity estimate the analysis presented suggests reported elasticity estimates will be influenced by such factors as estimation technique data frequency and time period under consideration with respect to time the findings suggest that the demand for alcoholic beverages has become less inelastic since the mid 1950s and that the income elasticity has been falling since the mid 1960s the analysis also found support for the idea that alcohol as a commodity group is a necessity and that consumers respond to price discounting with inventory behaviour rather than true substitution behaviour little support is found for the idea that the demand for alcoholic beverages varies fundamentally across most countries although wine may be an exception language en

understanding alcohol consumption across countries with unpublished data from the international comparison program that cover the consumption of three alcoholic beverages in over 150 countries we analyse drinking patterns around the world with an

advertising and the us market demand for beer the us per capita market demand for beer is empirically estimated to determine the effect of advertising on the demand for beer the empirical results indicate that the most important determinants of demand are the price of beer the price of substitutes demographic factors and a light beer dummy variable the positive effects of income and lagged consumption appear to be small although many have argued that advertising promotes beer consumption the empirical results of this study do not support this hypothesis

alcohol control laws and the consumption of distilled spirits and beer this article tests the social marketing effectiveness of alcohol control laws designed to reduce the consumption of alcoholic beverages the study uses state level historical data to estimate the demand for distilled spirits and beer using economic sociodemographic and control law explanatory variables spirits and beer consumption are found to react differently to changes in economic sociodemographic and regulatory variables these differences suggest a consumer and product segment based approach to alcohol control laws or social marketing that emphasizes measures directed at youths for beer and at price for spirits

the demand for alcoholic drink in the united kingdom 1963 78 1983 the demand for alcoholic drink in the united kingdom 1963 78 applied economics vol 15 no 1 pp 125 140

dynamic almost ideal demand systems an empirical analysis of alcohol expenditure in ireland this paper presents a dynamic form of the almost ideal demand system aids three versions of the static aids model are employed to determine the preferred long run equilibrium model and represents the short run dynamics by an error correction mechanism this estimation procedure is then applied to alcohol expenditure in ireland the estimated point elasticities are consistent with previous studies and a priori expectations beer and spirits are found to be price inelastic in both the short and long run while wine is price inelastic in the short run and price elastic in the long run

the demand for home produced and imported alcoholic beverages in cyprus the aids approach the purpose of this paper is to investigate the demand and its composition between home produced and imported for alcoholic beverages in cyprus the methodological approach used is the almost ideal demand system aids both in static and dynamic terms empirically the aids both in its static and dynamic version was estimated using time series 1970 1992 for three sets of data which include 1 alcoholic beverages wine beer other brandies broken down between home produced and imported model a 2 alcoholic beverages only without disaggregation between home produced and imported model b and 3 aggregate alcoholic beverages wine beer other brandies and food model c zellner s iterative estimation procedure was used for estimating the model the empirical findings 1 strongly support the dynamic version of the aids over its static alternative and 2 provide certain guidelines concerning economic policies relating to an increase in government revenues and changing the composition between

alcohol consumption and human capital a retrospective study of the literature grossman proposed an individual s health can be viewed as one aspect of their human capital following this line of thought a number of recent papers have reported a positive impact of alcohol consumption on earnings the rationale for the existence of such a relationship is the positive impact of alcohol on physical and mental health we conduct a meta analysis to determine whether such factors as the estimation technique the presence of ex drinkers in the sample possible sample selection bias and publication bias may all contribute to these findings an additional suggestion for the positive relationship between alcohol and wages is the presence of a common set of personality traits that determines drinking behaviour and also leads to higher earnings we examine this relationship by reviewing the literature that investigates if the personality influencing aspects of alcohol consumption influences measures of human capital we also survey the significant body of research that has examined how alcohol consumption has been found to influence educational outcomes and the work force participation of problem drinkers

a microeconometric model analysis of us consumer demand for alcoholic beverages this paper discusses the specification and estimation of a two stage budgeting consumer demand for alcoholic beverages using 1987 88 usda individual and household food consumption survey data the upper level first stage budgeting decision is modelled via a gamma tobit model the lower level second stage budgeting allocates alcohol expenditure via a synthetic demand system for beer spirits and wine the synthetic system is constructed via a normalized linear combination of the level rotterdam cbs and an aids equivalent model data on individual three day alcohol consumption from the individual food intake survey are used for analysis while price and household characteristics information are obtained from the house hold food intake survey the results show that some individual and household characteristic variables as well as economic variables have significant impacts on consumer demand for alcoholic beverages

the demand for domestic and imported alcoholic beverages in ontario canada a dynamic simultaneous equation approach the purpose of this paper is to estimate simultaneously dynamic demand functions and consequently income and price elasticities for domestic and imported alcoholic beverages for the province of ontario the methodology used is the almost ideal demand system originally developed by deaton and muellbauer 1980 augmented by pollak s 1970 habit formation hypothesis the empirical application uses time series 1958 1987 for imported and domestically produced spirits wine and beer the findings provide strong support favouring the dynamic version of the almost ideal demand system over its static alternative but little evidence of strong substitution between domestic and imported products

entrepreneurship social mobility and income redistribution in south india development economists have been preoccupied with the problem of increasing the size of the gnp pie to the relative neglect of its distribution despite the recent disenchantment with the viewpoint that all classes share in the benefits of industrial growth empirical data on the distribution of income business opportunity and economic power are in short supply many of the studies on entrepreneurship and economic development when they are not apologetics for ruthless capitalist exploitation as paul baran suggests extol the achievements of the capitalist entrepreneur without examining class origins and monopoly advantage joseph schumpeter sees entrepreneurs irrespective of class origin as heroic figures with the dream and will to found a private kingdom to conquer adversity to achieve success for its own sake and to experience the joy of creation for gustav papanek 1967 the private entrepreneur who is frugal diligent far sighted remarkably able and willing to take political risks is in large part responsible for the success of pakistan in achieving rapid industrialization

what drives our beer consumption in search of nutrition habits and demographic patterns conventional wisdom in germany claims pork hocks with sauerkraut and beer but is it really that simple in an unbalanced cross country panel covering 169 nations and time series records of up to 5

economic and demographic factors in australian alcohol demand in the last two decades total pure alcohol consumption in australia has declined by about 31 and currently it is at the same level as it was in the 1950s australians consumed about 10 litres of pure alcohol per person in 1982 and now the level has declined to about 7 litres of pure alcohol per person during the last four decades per capita beer consumption has reached a peak of 140 litres in 1975 and has fallen to a low 93 litres in 1999 wine consumption has increased four fold while spirits consumption has stayed around the same level this paper using the australian consumption data for beer wine and spirits for the period 1956 1999 aims to explain the change in consumption patterns of beer wine and spirits by considering the effects due to changes in economic and demographic factors the results show that while income and prices significantly influence the consumption patterns of alcohol the increasing australian elderly population also plays an important role

the impact of the canada united states free trade agreement on u s wine exports on 1 january 1989 the canada united states free trade agreement went into effect the agreement reduced the restrictions on the importation and marketing of wine produced in the united states this article analyzes the impact of this lessening on united states wine exports to canada a demand relation for united states exports to canada is estimated and then used to decompose the effects into their proximate causes these causes are a own price and exchange rate effects b substitute price and exchange rate effects c changes in real income in canada d tariff removal effects and e removal of nontariff trade barriers by canada

modelling the trend and seasonals within an aids model of the demand for alcoholic beverages in the united kingdom the argument that is put forward in this paper is that failure to represent stochastic trend and stochastic seasonality in an aids model leads to a misspecified and possibly structurally unstable model this proposition is verified by estimating an aids model of the demand for alcoholic beverages in the united kingdom three versions of the model are estimated and it is demonstrated that the version allowing for stochastic trend and stochastic seasonality performs better than the other two versions of the model in terms of the diagnostics tests and goodness of fit measures the best estimated model turns out to possess the properties of having common components and being homogenous further empirical testing reveals the presence of stochastic trends and cointegration between the budget shares of beer and wine the results clearly indicate that there has been a shift away from the consumption of beer towards wine copyright 2002 john wiley sons ltd

a theory of rational addiction we develop a theory of rational addiction in which rationality means a consistent plan to maximize utility over time strong addiction to a good requires a big effect of past consumption of the good on current consumption such powerful complementarities cause some steady states to be unstable they are an important part of our analysis because even small deviations from the consumption at an unstable steady state can lead to large cumulative rises over time in addictive consumption or to rapid falls in consumption to abstention our theory also implies that cold turkey is used to end strong addictions that addicts often go on binges that addicts respond more to permanent than to temporary changes in prices of addictive goods and that anxiety and tensions can precipitate an addiction

empirical application of optimal commodity tax theory to taxation of alcoholic beverages this paper concerns the calculation of optimal taxes on commodities which contain a common externality generating component the first best solution is characterized by a form of marginal cost pricing with production costs increased according to the harm content of commodities valued at marginal external cost an application to finnish alcohol consumption data is made to indicate how the tradeoff between control and revenue requirements affects taxes by bootstrapping the estimates taxes are found to be less sensitive than compensated elasticities

the demand for alcohol in the united kingdom using the aids model we show that there exists for the uk a stable long run relationship between expenditure shares on beer cider spirits and wine alcohol prices total alcohol expenditure and a range of non economic variables relating to advertising licensing the employment social class and demographic characteristics of consumers and climate our estimates of key price and income elasticities generally lie between those found from other time series studies which exclude most of these non economic variables and those found from cross section studies which generally include them however the restrictions required for separability homegeneity and symmetry although not those for perfect price aggregation are decisively rejected

the demand for beer wine and spirits a systemwide analysis the systemwide approach to the analysis of consumer demand considers the multivariate structure of the problem in which the consumer allocates his income to all goods simultaneously this approach combines the theory of the consumer with empirical analysis and has enjoyed much popularity over the past decade for surveys of these developments see brown and deaton 1972 phlips 1974 powell 1974 theil 1975 76 1980 barten 1977 and theil and clements 1980 most previous applications of the systemwide approach have used national accounts commodity groups food clothing housing and so on for many business and government policy purposes however these groups are much too broad for example to analyze the effects on consumption of all but the simplest changes in indirect taxes we would need considerably more disaggregation similarly market researchers need to analyze demand at the individual product level for purposes of forecasting and formulating pricing and other policies the objective of this paper is to use the consumption of beer wine and spirits to illustrate how the approach can be apthis paper illustrates how the systemwide approach to consumer demand can be extended so that it can be applied to narrowly defined commodity groups we use the consumption of beer wine and spirits to show how the approach can be applied to estimate income and price elasticities of demand when the consumer s utility function is appropriately separable in alcoholic beverages and all other goods it is possible to confine our attention to the three beverages and ignore all other goods we use the demand model for a number of simulations designed to analyze the rapid growth of wine consumption we are indebted to john davis peter goldschmidt and kal stening for excellent research assistance to michael wohlgenant and henri theil for helpful comments and discussion and to the new south wales drug and alcohol authority for their partial financial support of this research

are alcohol tax hikes fully passed through to prices evidence from alaska on 1 october 2002 the state of alaska increased taxes on malt beverages from 0 35 per gallon to 1 07 per gallon increased taxes on wine from 0 85 per gallon to 2 50 per gallon and increased taxes on distilled spirits from 5 60 per gallon to 12 80 per gallon the net effect is that the tax on a standard serving rose from about 3 cents for beer 2 cents for wine and 4 cents for spirits to a uniform tax of 10 cents per standard serving of each type of alcohol beverage this paper uses primary data on alcoholic beverage prices in alaska to study a very basic question what was the impact of the tax hikes on prices an alcohol tax hike is often viewed as a public health policy tool to discourage excessive alcohol consumption and alcohol related problems such as drunk driving the impact of a tax hike on alcoholic beverage prices is a key link in the chain of the causality from the tax to public health economic theory and previous empirical studies mainly of taxes on goods other than alcoholic beverages do not provide very much guidance on what to expect following a tax hike it is an empirical question to answer the question i conducted telephone surveys just before and a year after the tax hike of on premise and off premise alcohol retail establishments across alaska

prohibition and the market for illegal drugs over the past 25 years in the united states enforcement of drug prohibition has expanded dramatically over the same period however the trends in drug production and consumption have been essentially flat and the real purityadjusted prices of both cocaine and heroin have more than halved this combination of facts raises questions about the effectiveness of prohibition enforcement and it constitutes a puzzle that is interesting to explain in this paper the authors document these facts and explore possible explanations they do not claim to provide a complete answer but shed light on which explanations are likely to be important

foreign exchange controls in a black market economy abstract an investigation of the impact of foreign exchange controls in a black market economy is undertaken within the context of a choice theoretic cash in advance general equilibrium model while such controls may improve a distortion free economy s trade balance and balance of payments they are found to increase the domestic price of imports and lower the country s welfare the ramifications of black market for economic welfare turn out to be ambiguous depending crucially on the government s reaction to the leakage of foreign exchange into the economy via illegal activity

advertising and us alcoholic beverage demand system wide estimates the effects of advertising on consumption of alcoholic beverages in the us are analysed the goal is to obtain evidence on the importance of advertising at the level of beverage demand beer wine spirits and for total consumption of alcohol per capita gallons of ethanol a three equation conditional demand system is estimated that includes own and cros beverage advertising as explanatory variables four models of the differential demand system are estimated including the rotterdam aid cbs and nbr models using annual us data for the period 1964 90 on beverage consumption prices expednitures and real advertising estimates are obtained of the complete matrix of own and cross elascities for each beverage price and advertising at the beverage level the results indicate a positive butr very small effect of advertising on beverage consumption with most of the impact due to wine advertising and non due to beer advertising there is no efect of advertising in the composite demand function for al

the effect of alcohol use on wages 1988 the effect of alcohol use on wages applied economics vol 20 no 10 pp 1343 1351

cross country alcohol consumption comparison an application of the rotterdam demand system this paper analyses the consumption patterns of the three beverages beer wine and spirits in nine countries australia canada finland japan new zealand norway sweden the uk and the us using the rotterdam demand system a cross country comparison of the results shows that in most countries i wine consumption has grown at a fasteer rate than beer and spirits ii the proportion of consumers expenditure on alcohol is declining iii beer is a necessity and spirits is a luxury iv the demand for the three beverages is price inelastic and iv all three beverages are pair wise substitutes we also investigated the hypothesis of identical parameters for all countries by pooling the data across countries and found that the data do not support the hypothesis

modeling the demand for alcoholic beverages and advertising specifications in this paper the demand for beer wine spirits and soft drinks in ontario is modeled in two parts an equation is specified to endogenize group expenditures and a demand system is set up to allocate budgeted group expenditures across types of beverages advertising is allowed to influence both the level of group expenditures and its allocation three popular advertising specifications are compared using the j test and the likelihood dominance criterion even though all three specifications fitted well according to standard criteria the calculated expenditure price and advertising elasticities were sensitive to the manner with which advertising is specified this clearly highlights the need to rely on a sound criterion to identify a dominant specification from the identified dominant specification we found that advertising has very subtle effects on expenditures on alcoholic beverages group and individual beverages thus advertising is not effective in enlarging markets and this suggests that firms especially breweries use advertising to compete in zero sum market share games from a public policy perspective our results are comforting but future research should investigate whether the neutral effect of advertising on aggregated expenditures hide substantial offsetting changes in the drinking habits of individuals 2000 elsevier science b v all rights reserved

short run and long run elasticities for canadian consumption of alcoholic beverages an error correction mechanism cointegration approach elasticities for beer wine and spirits are estimated for each of the provinces of canada over the period 1956 83 using unrestricted dynamic regressions modeled after the error correction mechanism alternative long run estimates are also obtained from cointegrating regressions estimates vary markedly across provinces and suggest that increases in price will reduce consumption of all beverages in the short run but in the long run no evidence is found that spirits use is price sensitive increases in the legal drinking age reduce consumption in the short run but there is little indication of a long run effect the estimated income elasticity of beer is small while the estimated income elasticities for spirits and wine are substantially larger especially in the long run coauthors are ernest h oksanen michael r veall and deborah fretz copyright 1992 by mit press

the demand for alcohol in the uk a comment in a recent article appearing in this journal mcguinness 3 explores the effects of income prices advertising and availability on the consumption of alcohol in the uk his conclusions regarding the effects of advertising on consumption have attracted considerable attention 1 5 from an economic viewpoint his findings regarding the relatively weak and uncertain influence of income on the growth of demand are equally notable the purpose of the present comment is to show that certain unusual features of mcguinness s analysis have important implications for his reported findings mcguinness s regression analysis is based on the first differences of 21 annual observations 1955 75 the general approach used is illustrated by the following representative equation

elasticities of beer demand revisited abstract this paper uses u s aggregate beer consumption data from 1964 1992 to empirically estimate the elasticities of demand for beer however rather than assuming the behavioral parameters are time invariant we estimate a gradual switching regression model that explicitly allows the elasticities to change over time results suggest that this more general model is warranted as findings illustrate the importance of variable dynamics when evaluating the efficacy of proposed policy alternatives

the demand for alcoholic beverages in spain the objective of this study is to analyze the main determinants of alcoholic beverages consumption at home data comes from the latest spanish household national survey which provides information on expenditure and quantities of different food products by household because households are interviewed only 1 week a large number of zeros have been recorded among the existing censured demand models the double hurdle dh model the purchase infrequency model and the tobit purchase infrequency model among others and after carrying out model selection tests the dh model has been finally estimated all expenditure elasticities are positive corresponding the highest value to spirits own price elasticities are negative and also in this case the spirits exhibit the highest value socio economic variables also play an important role in explaining consumer purchase and consumption decisions

a dynamic demand model for liquor the case for pooling this paper estimates a dynamic demand model for liquor in the united states using panel data from 43 states because of taste changes over time and between states in liquor consumption purely time series or cross sectional studies do not elicit reliable price elasticity estimates this study makes the case for pooling and shows how one can control for individual state effects and endogeneity of the regressors using estimators suited for a dynamic demand model our results indicate that the long run price elasticity is in the 0 7 range the findings also support strong habit persistence a small positive income elasticity and very weak evidence of bootlegging from adjoining states the magnitude of the long run price effect suggests that sin taxes can serve not only as an important income source but also as a significant deterrent effect copyright 1995 by mit press

the optimal rate of inflation with trending relative prices relative price trends mean that monetary policy cannot stabilize the nominal prices of all consumption categories if prices are sticky monetary policy must then trade off distortions within different categories more weight should be placed on stabilizing prices for which adjustment entails greater distortions with exogenous price stickiness a simple model calibrated to u s data implies that slight deflation is optimal even absent money demand considerations if price stickiness is endogenous because of fixed costs of adjustment small inflation or small deflation can be optimal depending on whether demand conditions or price adjustment costs vary across sectors

alcohol and earnings does drinking yield a wage premium this paper examines the relationship between alcohol consumption and earnings for prime age males wage differentials for non moderate and heavy drinkers are estimated using a polychotomous choice model which accounts for the endogenous relationship be tween drinking and earnings we find that moderate alcohol consumption leads to increased earnings relative to abstention however heavy drinking leads to reduced earnings relative to moderate drinking heavy drinkers possess flatter age earnings profiles and attain lower returns for higher education than non and moderate drinkers these results are in contrast to previous research on substance abuse which finds no earnings drop off for heavy users

the rotterdam demand model and its application in marketing this paper shows how the system wide approach to demand analysis can be utilized in marketing in the context of the rotterdam model we describe how the approach can be applied to narrowly defined groups of goods such as beer wine and spirits to estimate income and price elasticities of demand the paper also provides extensions to deal with advertising and introduces a new way of identifying market structure

quasi experimental price elasticity of liquor demand in the united states 1960 83 this paper uses sixty five recent tax changes on liquor in private licensed states over the period 1960 83 to update simon s quasi experimental price elasticity of liquor three alternative measures for liquor price are used and the sensitivity of this price elasticity to border effect purchases as well as market changes over time are examined our results support a liquor price elasticity estimate of 7 however the confidence interval on this estimate is wide border effect purchases as well as changes in the liquor market over time are statistically insignificant