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The Economic Determinants of Alcohol Consumption

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  • K.W. Clements
  • S. Selvanathan
Abstract
In this paper is presented an analysis of the consumption patterns of beer, wine and spirits for Australia using data for the period 1955/56-1985/86. The validity of the demand theory hypotheses demand homogeneity and Slutsky symmetry has been tested using recently developed distribution• free procedures. The findings were that (i) beer and wine were necessities and spirits a strong luxury; (ii) beer and spirits are specific complements; and (iii) the homogeneity and symmetry hypotheses are acceptable. Preference for wine consumption seems to be independent of preference for beer and spirits.
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Suggested Citation

  • K.W. Clements & S. Selvanathan, 1991. "The Economic Determinants of Alcohol Consumption," Economics Discussion / Working Papers 91-07, The University of Western Australia, Department of Economics.
    • Handle: RePEc:uwa:wpaper:91-07
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    File URL: https://ecompapers.biz.uwa.edu.au/paper/PDF%20of%20Discussion%20Papers/1991/91-07%20Clements%2C%20K.W-Selvanathan.S.pdf
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    References listed on IDEAS

    as
    1. Laitinen, Kenneth, 1978. "Why is demand homogeneity so often rejected?," Economics Letters, Elsevier, vol. 1(3), pages 187-191.
    2. Clements, Kenneth W & Johnson, Lester W, 1983. "The Demand for Beer, Wine, and Spirits: A Systemwide Analysis," The Journal of Business, University of Chicago Press, vol. 56(3), pages 273-304, July.
    3. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1975. "Transcendental Logarithmic Utility Functions," American Economic Review, American Economic Association, vol. 65(3), pages 367-383, June.
    4. Kenneth W. Clements & E. Antony Selvanathan, 1988. "The Rotterdam Demand Model and its Application in Marketing," Marketing Science, INFORMS, vol. 7(1), pages 60-75.
    5. Kenneth W. Clements & Saroja Selvanathan, 1991. "The Economic Determinants Of Alcohol Consumption," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 35(2), pages 209-231, August.
    6. E. A. Selvanathan, 1991. "Further Results on Aggregation of Differential Demand Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(4), pages 799-805.
    7. K.E. Quek, 1988. "The Demand of Alcohol in Canada: An econometric study," Economics Discussion / Working Papers 88-08, The University of Western Australia, Department of Economics.
    8. Jones, Andrew M, 1989. "A Systems Approach to the Demand for Alcohol and Tobacco," Bulletin of Economic Research, Wiley Blackwell, vol. 41(2), pages 85-105, April.
    9. William A. Barnett, 1979. "Theoretical Foundations for the Rotterdam Model," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 46(1), pages 109-130.
    10. D. Pearce, 1986. "The Demand for Alcohol in New Zealand," Economics Discussion / Working Papers 86-02, The University of Western Australia, Department of Economics.
    11. Kenneth W. Clements & Antony Selvanathan & Saroja Selvanathan, 1996. "Applied Demand Analysis: A Survey," The Economic Record, The Economic Society of Australia, vol. 72(216), pages 63-81, March.
    12. repec:bla:ecorec:v:64:y:1988:i:187:p:268-74 is not listed on IDEAS
    13. Jammie H. Penm, 1988. "An Econometric Study of the Demand for Bottled, Canned and Bulk Beer," The Economic Record, The Economic Society of Australia, vol. 64(4), pages 268-274, December.
    14. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
    15. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-326, June.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Kenneth W. Clements & Yihui Lan & Xueyan Zhao, 2005. "The Demand for Vice: Inter-Commodity Interactions with Uncertainty," Economics Discussion / Working Papers 05-30, The University of Western Australia, Department of Economics.
    2. Edward Oczkowski, 1994. "A Hedonic Price Function For Australian Premium Table Wine," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 38(1), pages 93-110, April.
    3. Joshua Byrnes & Dennis Petrie & Christopher Doran & Anthony Shakeshaft, 2012. "The efficiency of a volumetric alcohol tax in Australia," Applied Health Economics and Health Policy, Springer, vol. 10(1), pages 37-49, January.
    4. Wittwer, Glyn & Anderson, Kym, 1999. "Accounting for Growth in Australia’s Grape and Wine Industries, 1986 to 2003," 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand 125043, Australian Agricultural and Resource Economics Society.
    5. Clements, Kenneth W. & Gao, Grace, 2015. "The Rotterdam demand model half a century on," Economic Modelling, Elsevier, vol. 49(C), pages 91-103.
    6. Lara Agnoli & J. François Outreville, 2021. "Wine Consumption and Culture: A Cross‐Country Analysis," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(3), pages 1101-1124, September.
    7. S. Selvanathan & E.A. Selvanathan, 2005. "Empirical Regularities in Cross‐Country Alcohol Consumption," The Economic Record, The Economic Society of Australia, vol. 81(s1), pages 128-142, August.
    8. P. Moffatt & D.J. Butler, 1996. "On the Demand for Hyper-Substitutes with Satiation," Economics Discussion / Working Papers 96-03, The University of Western Australia, Department of Economics.
    9. K.W. Clements, 1993. "The Economics of Drinking and Smoking," Economics Discussion / Working Papers 93-13, The University of Western Australia, Department of Economics.
    10. Liesbeth Colen & Johan Swinnen, 2016. "Economic Growth, Globalisation and Beer Consumption," Journal of Agricultural Economics, Wiley Blackwell, vol. 67(1), pages 186-207, February.
    11. E. A. Selvanathan & S. Selvanathan, 2004. "Economic and demographic factors in Australian alcohol demand," Applied Economics, Taylor & Francis Journals, vol. 36(21), pages 2405-2417.
    12. Kenneth W. Clements & Antony Selvanathan & Saroja Selvanathan, 1996. "Applied Demand Analysis: A Survey," The Economic Record, The Economic Society of Australia, vol. 72(216), pages 63-81, March.
    13. Bartkus Algirdas, 2019. "The Impact of Excise Tax Increases on Ethyl Alcohol Sales in Lithuania," Ekonomika (Economics), Sciendo, vol. 98(2), pages 55-75, December.
    14. Kenneth Clements & Yihui Lan & Xueyan Zhao, 2010. "The demand for marijuana, tobacco and alcohol: inter-commodity interactions with uncertainty," Empirical Economics, Springer, vol. 39(1), pages 203-239, August.
    15. Dennis Petrie & Christopher Doran & Anthony Shakeshaft & Rob Sanson-Fisher, 2009. "The demand for intensity versus frequency of alcohol consumption: Evidence from rural Australia," Dundee Discussion Papers in Economics 222, Economic Studies, University of Dundee.
    16. Kenneth W. Clements & Saroja Selvanathan, 1991. "The Economic Determinants Of Alcohol Consumption," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 35(2), pages 209-231, August.
    17. Chang, Hui-Shung & Griffith, Garry & Bettington, Nicholas, 2002. "The Demand for Wine in Australia Using a Systems Approach: Industry Implications," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 10, pages 1-12, September.
    18. Saroja Selvanathan, 2006. "How similar are alcohol drinkers? International evidence," Applied Economics, Taylor & Francis Journals, vol. 38(12), pages 1353-1362.
    19. Kingston, Geoffrey & Melecky, Martin, 2007. "Currency preferences and the Australian dollar," Journal of International Money and Finance, Elsevier, vol. 26(3), pages 454-467, April.
    20. Clements, Kenneth W. & Mariano, Marc Jim M. & Verikios, George & Wong, Berwyn, 2022. "How elastic is alcohol consumption?," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 568-581.
    21. J. Freebairn & E.A. Selvanathan & J. Fahrer & P. van der Lee, 1996. "The Economics of Taxing Wine," Economics Discussion / Working Papers 96-09, The University of Western Australia, Department of Economics.
    22. James Fogarty, 2010. "The Demand For Beer, Wine And Spirits: A Survey Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 24(3), pages 428-478, July.
    23. Preety Srivastava & Keith R. McLaren & Michael Wohlgenant & Xueyan Zhao, 2014. "Econometric Modelling of Price Response by Alcohol Types to Inform Alcohol Tax Policies," Monash Econometrics and Business Statistics Working Papers 5/14, Monash University, Department of Econometrics and Business Statistics.
    24. Wittwer, Glyn, 2000. "The Sensitivity Of Wine Industry Outcomes To Model Assumptions In Gst Scenarios," 2000 Conference (44th), January 23-25, 2000, Sydney, Australia 123742, Australian Agricultural and Resource Economics Society.
    25. James Fogarty, 2004. "The Own-Price Elasticity of Alcohol: A Meta-Analysis," Economics Discussion / Working Papers 04-01, The University of Western Australia, Department of Economics.

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