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

Meng, Y., Brennan, A., Purshouse, R., Hill-McManus, D., Angus, C., Holmes, J. and Meier, P. S. (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, 34, pp. 96-103. (doi: 10.1016/j.jhealeco.2013.12.006) (PMID:24508846) (PMCID:PMC3991422)

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.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Meier, Professor Petra
• Authors: Meng, Y., Brennan, A., Purshouse, R., Hill-McManus, D., Angus, C., Holmes, J., and Meier, P. S.
• College/School: College of Medical Veterinary and Life Sciences > School of Health & Wellbeing > MRC/CSO SPHSU
• Journal Name: Journal of Health Economics
• Publisher: Elsevier
• ISSN: 0167-6296
• ISSN (Online): 1879-1646
• Published Online: 19 January 2014
• Copyright Holders: Copyright © 2014 Elsevier B.V.
• First Published: First published in Journal of Health Economics 34: 96-103
• Publisher Policy: Reproduced under a Creative Commons License