Alcohol Demand and Price Sensitivity in China
Author Information
Author(s): Tian Guoqiang, Liu Feng
Primary Institution: China Agricultural University; Shanghai University of Finance and Economics
Hypothesis
Is the demand for alcoholic beverages in developing countries sensitive to price?
Conclusion
The study finds that price elasticity of alcohol consumption in China is very low, indicating that price increases alone may not effectively reduce alcohol-related problems.
Supporting Evidence
- The price elasticity for beer is virtually zero and −0.12 for liquor.
- Men are primarily driving the results, with significantly higher alcohol consumption than women.
- Social drinking norms in China may reduce sensitivity to price changes.
Takeaway
This study shows that in China, people don't really drink less alcohol when prices go up, especially men.
Methodology
The study uses a large individual-level dataset from the China Health and Nutrition Survey and estimates two-part models of alcohol demand.
Potential Biases
Potential endogeneity bias in price measurement due to the method of calculating alcohol prices.
Limitations
The study may not generalize to other developing countries due to unique cultural factors in China.
Participant Demographics
The sample includes 44,025 individuals from diverse socioeconomic backgrounds across nine provinces in China.
Statistical Information
Statistical Significance
p<0.05
Digital Object Identifier (DOI)
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