Send to:

Choose Destination
See comment in PubMed Commons below
Health Econ. 2013 Jan;22(1):89-105. doi: 10.1002/hec.1817. Epub 2011 Dec 12.

Understanding heterogeneity in price elasticities in the demand for alcohol for older individuals.

Author information

  • 1University of Iowa, Health Management and Policy, Iowa City, Iowa, USA.


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.

Copyright © 2011 John Wiley & Sons, Ltd.

[PubMed - indexed for MEDLINE]
Free PMC Article
PubMed Commons home

PubMed Commons

How to join PubMed Commons

    Supplemental Content

    Full text links

    Icon for John Wiley & Sons, Inc. Icon for PubMed Central
    Loading ...
    Write to the Help Desk