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. 2014 Mar;34(100):96-103.
doi: 10.1016/j.jhealeco.2013.12.006. Epub 2014 Jan 19.

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

Yang Meng  1 , Alan Brennan  2 , Robin Purshouse  3 , Daniel Hill-McManus  2 , Colin Angus  2 , John Holmes  2 , Petra Sylvia Meier  2
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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

Yang Meng et al. J Health Econ. 2014 Mar.

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.

Keywords: Alcohol demand; Cross price elasticities; Elasticities; Pseudo-panel.

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