| Title | Understanding heterogeneity in price elasticities in the demand for alcohol for older individuals. |
| Publication Type | Journal Article |
| Year of Publication | 2013 |
| Authors | Ayyagari, P, Deb, P, Fletcher, JM, Gallo, WT, Sindelar, JL |
| Journal | Health Econ |
| Volume | 22 |
| Issue | 1 |
| Pagination | 89-105 |
| Date Published | 2013 Jan |
| ISSN Number | 1099-1050 |
| Keywords | Adult, Aged, Aged, 80 and over, Alcohol Drinking, Alcoholic Beverages, Behavior, Body Height, Costs and Cost Analysis, Female, Health Status, Humans, Male, Middle Aged, Models, Econometric, Socioeconomic factors, Taxes, United States |
| Abstract | This paper estimates the price elasticity of demand for alcohol using Health and Retirement Study data. To account for unobserved heterogeneity in price responsiveness, we use finite mixture models. We recover two latent groups, one is significantly responsive to price, but the other is unresponsive. The group with greater responsiveness is disadvantaged in multiple domains, including health, financial resources, education and perhaps even planning abilities. These results have policy implications. The unresponsive group drinks more heavily, suggesting that a higher tax would fail to curb the negative alcohol-related externalities. In contrast, the more disadvantaged group is more responsive to price, thus suffering greater deadweight loss, yet this group consumes fewer drinks per day and might be less likely to impose negative externalities. |
| DOI | 10.1002/hec.1817 |
| User Guide Notes | |
| Endnote Keywords | Alcohol/Price elasticity/alcohol taxation/Public Policy/Elasticity of demand/heterogeneous policy responses/Fiscal policy/Fiscal policy/latent groups |
| Endnote ID | 69734 |
| Alternate Journal | Health Econ |
| Citation Key | 7917 |
| PubMed ID | 22162113 |
| PubMed Central ID | PMC3641566 |
| Grant List | R01 AG027045 / AG / NIA NIH HHS / United States |
