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

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


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.

Publication types

  • Research Support, Non-U.S. Gov't

MeSH terms

  • Adult
  • Aged
  • Aged, 80 and over
  • Alcohol Drinking / economics
  • Alcohol Drinking / epidemiology
  • Alcoholic Beverages / economics*
  • Alcoholic Beverages / supply & distribution
  • Beer / economics
  • Beer / supply & distribution
  • Costs and Cost Analysis* / statistics & numerical data
  • Data Collection
  • Female
  • Humans
  • Income / statistics & numerical data
  • Male
  • Middle Aged
  • Socioeconomic Factors
  • United Kingdom / epidemiology