Is the Demand for Alcoholic Beverages in Developing Countries Sensitive to Price? Evidence from China

Tian, Guoqiang; Liu, Feng

doi:10.3390/ijerph8062124

Cited by 23 publications

(19 citation statements)

References 12 publications

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“…However, Forgaty (2010) surveyed a number of studies on alcohol demand elasticity and found that demand for alcoholic beverages in many countries is inelastic to own price. Kumar (2017), Tian and Liu (2011) confirmed this finding in developing countries such as India and China. Therefore, the imposition of excise tax on alcoholic beverages and non-alcoholic packed drinks might not be effective in controlling consumption.…”

Section: Introductionsupporting

confidence: 68%

The Determinants of an Econometric Demand Model for Beverages

Toan¹

2020

IJEBA

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Purpose:The study attempts to explore the determinants of demand for alcoholic and other beverages to see how a rise in prices of alcohol and other beverages and in household expenditure would influence demand. From the results, we discuss the effectiveness of a prospective excise tax increase on demand for alcoholic and other beverages. Design/Methodology/Approach: We use the Almost Ideal Demand System to analyze the demand for alcoholic and other beverages. A two-stage estimation approach is employed to estimate the model with data from Vietnam Households Living Standard survey in 2016. In the first stage, we model the choice of consuming or not consuming by a probit regression model. In the second stage, we estimate the demand system by seemingly unrelated regression (SUR). Findings: We find that demand for beer, other alcoholic beverages, and non-alcoholic packed drinks is elastic to own-price. However, as demand for beer and non-alcoholic packed drinks is also elastic to income, consumption would rise as income grows. Practical implications: Our findings have significant implications for policymakers and beverage producers. The findings suggest that an increase in excise tax would be an effective solution to control demand for alcoholic beverages. Beverage producers could also use the results to design pricing strategies and forecast consumer behaviors. Originality/Value: We contribute new findings to the literature of beverage demand analyses. Our findings differ from those in previous studies in the context of both developed and developing countries, which show that demand for alcoholic beverages is inelastic to own-prices. The findings have important implications for policymakers and beverage producers.

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Section: Introductionsupporting

confidence: 68%

The Determinants of an Econometric Demand Model for Beverages

Toan¹

2020

IJEBA

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“…For quantile regressions, elasticities are small, about À0.06 and À0.10. Tian and Liu (2011), China, 1993 Mixed results are reported, but participation elasticities are about À0.03 for men and À0.01 for women. The quantity elasticity is about À0.11 for men and not significantly different from zero for women.…”

Section: Empirical Results For Adult Drinking By Gendermentioning

confidence: 96%

“…However, Zhang () finds no effect in the USA for alcohol taxes and drinking participation by pregnant women. Tian and Liu () obtain mixed results for China, but the significant participation elasticities are only −0.03 for men and −0.01 for women. Belanciuc () reports insignificant participation elasticities for Ukrainian men and women.…”

Section: Results—gender Differences In Adult Drinkingmentioning

confidence: 99%

“…The 15 studies present a diverse set of results and comparisons because in part of differences in drinking measures and outcomes. Three studies report results for drinking participation by gender: Belanciuc (); Decker and Schwartz (); and Tian and Liu (). Ten studies compare drinking levels by men and women generally.…”

Section: Results—gender Differences In Adult Drinkingmentioning

confidence: 99%

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Gender Differences in Alcohol Demand: A Systematic Review of the Role of Prices and Taxes

Nelson

2013

Health Economics

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Gender differences in drinking patterns are potentially important for public policies, especially policies that rely extensively on higher alcohol taxes and prices. This paper presents a systematic review of alcohol prices and gender differences in drinking and heavy drinking by adults and young adults. Starting with a database of 578 studies of alcohol demand and other outcomes, 15 studies are reviewed of adult drinking including discussion of samples, measurement issues, econometric models, special variables, and key empirical results. A similar discussion is presented for eight studies of drinking by young adults, ages 18–26 years. Four conclusions are obtained from the review. First, adult men have less elastic demands compared with women. Second, there is little or no price response by heavy‐drinking adults, regardless of gender. Third, although the sample is small, price might be important for drinking participation by young adults. Fourth, the results strongly suggest that heavy drinking by young adults, regardless of gender, is not easily dissuaded by higher prices. Policy implications, primary study limitations, and suggestions for future research are discussed. Copyright © 2013 John Wiley & Sons, Ltd.

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“…Legislation may be aimed at determining minimum levels of taxation and/or pricing. Governmental legislation regarding economic availability may also involve setting limitations on price discounts and advertisements of these products (Tian & Liu, 2011). Despite legislation on pricing and taxes, risky products may still be available at low prices in various ways.…”

Section: Reducing Economic Availabilitymentioning

confidence: 99%

Off limits. The effectiveness of age limits in reducing underage sales

Gosselt¹

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Is the Demand for Alcoholic Beverages in Developing Countries Sensitive to Price? Evidence from China

Cited by 23 publications

References 12 publications

The Determinants of an Econometric Demand Model for Beverages

The Determinants of an Econometric Demand Model for Beverages

Gender Differences in Alcohol Demand: A Systematic Review of the Role of Prices and Taxes

Off limits. The effectiveness of age limits in reducing underage sales

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