To determine if taxation policies that increase the price of alcohol differentially reduce alcohol consumption for heavy drinkers in Australia.
A two-part demand model for alcohol consumption is used to determine the price elasticity of alcohol. Quantile regression is used to determine the price elasticity estimates for various levels of consumption.
The study uses Australian data collected by the National Drug Strategy Household Survey for the years 2001, 2004 and 2007.
Measures of individual annual alcohol consumption were derived from three waves of the National Drug Strategy Household Survey; alcohol prices were taken from market research reports.
For the overall population of drinkers, a 1 % increase in the price of alcohol was associated with a 0.96 % (95 % CI −0.35 %, −1.57 %) reduction in alcohol consumption. For those in the highest 10 % of drinkers by average amount consumed, a 1 % increase in the price of alcohol was associated with a 1.26 % (95 % CI 0.82 %, 1.70 %) reduction in consumption.
Within Australia, policies that increase the price of alcohol are about equally effective in relative terms for reducing alcohol consumption both for the general population and among those who drink heavily.
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Byrnes, J., Shakeshaft, A., Petrie, D. et al. Is response to price equal for those with higher alcohol consumption?. Eur J Health Econ 17, 23–29 (2016). https://doi.org/10.1007/s10198-014-0651-z