Estimation of integrated price elasticities for alcohol and tobacco in the United Kingdom using the living costs and food survey 2006–2017

2023/11/12 by Robert Pryce, Luke Wilson, Duncan Gillespie +3 · 1 voice · 8 citations
Economics, Econometrics and Finance · Mathematics · Medicine · #Alcohol #Alcohol consumption #Consumption (sociology) #Econometrics #Economics #Economics of Agriculture and Food Markets #Elasticity (physics) #Estimation #Mathematics #Microeconomics #Price elasticity of demand #Smoking Behavior and Cessation #Statistics #Substance Abuse Treatment and Outcomes #Survey data collection

paper · pdf · doi:10.1111/dar.13773

published in Drug and Alcohol Review 43(1), 315-324 (Wiley)

openalex publication_date 2023/11/12 · openalex created_date 2023/11/13 · openalex updated_date 2026/06/22

Abstract

INTRODUCTION: Evidence shows that price is an important policy lever in reducing consumption of alcohol and tobacco. However, there is little evidence of the cross-price effect between alcohol and tobacco. METHODS: This paper uses an econometric model which estimates participation and consumption elasticities, on data from the UK Living Costs and Food Survey 2006-2017 and extends the literature by, for the first time, estimating joint price elasticities for disaggregated alcohol and tobacco products. This paper presents new price elasticities and compares them to the existing literature. RESULTS: The own-price elasticity estimates are all negative for both participation and consumption. There is no pattern to the estimates of cross-price elasticities. The elasticity estimates, when used in the Sheffield Tobacco and Alcohol Policy Model, produce bigger changes in consumption for the same change in price compared to other elasticity estimates in the existing literature. DISCUSSION AND CONCLUSIONS: Consumption of alcohol and tobacco are affected by the prices of one another. Policymakers should bear this in mind when devising alcohol or tobacco pricing policies.

Citations

• Some Statistical Models for Limited Dependent Variables with Application to the Demand for Durable Goods
• Estimation of Relationships for Limited Dependent Variables
• Effects of beverage alcohol price and tax levels on drinking: a meta‐analysis of 1003 estimates from 112 studies
• Sample Selection Bias as a Specification Error
• 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

Cited by

• Scoping of Policy Impacts for Regulating E-cigarettes (SPIRE): findings from a data and decision analytic model mapping project

Discussions

• New thing #1 We've published new estimates, Led by Rob Pryce, of the price elasticities of alcohol and tobacco, including cross-substitution effects and separate impacts of price on both participatio [bsky, 0 points, 0 comments]

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