Understanding alcohol consumption across countries

ABSTRACT

With unpublished data from the International Comparison Program that cover the consumption of three alcoholic beverages in over 150 countries, we analyse drinking patterns around the world with an index-number approach, by estimating a demand system, and by studying the interaction among beverages in generating utility. We consider a separate demand system for each income quartile and find that tastes are not too different across quartiles. Broadly speaking, the results are robust to rolling sub-samples of countries, an alternative demand model and sample selectivity issues. The differences in the cost of alcohol across countries are also investigated, as is its role in affecting the degree of price-sensitivity of consumption.

KEYWORDS:

• International drinking patterns
• price sensitivity of consumption of beer
• wine and spirits
• alcohol demand system
• alcohol and utility

JEL CLASSIFICATION:

• D12
• C30

Acknowledgments

We would like to acknowledge the financial support from an Australian Government Research Training Program (RTP) Scholarship, and the World Bank for providing unpublished data. An earlier version of this paper was presented at the 12^th annual conference of the American Association of Wine Economists in 2018, and we thank the participants for their comments and suggestions. We also acknowledge the comments of an anonymous referee.

Disclosure Statement

No potential conflict of interest was reported by the authors.

Notes

¹ The only major exception is in Islamic countries where alcohol is prohibited/avoided for religious reasons.

² As it is an allocation model, one equation is redundant and dropped in estimation. Tests show that the homogeneity and symmetry constraints are not rejected. See Table A1 in the Appendix for details.

³ ‘The economic wealth of countries is associated with higher alcohol consumption and higher prevalence of current drinkers across all WHO regions’. (WHO 2018).