Is the demand for alcohol in Indigenous Australian communities ‘price inelastic’?

Abstract

To review the findings of a paper that has often been cited as evidence-with potentially adverse public health consequences-that the demand for alcohol in Indigenous Australian communities is not responsive to price and that, in the face of increasing alcohol prices, expenditure is diverted from basic sustenance to the purchase of alcohol. The raw data on income and various items of expenditure from the original study were entered in a database, a trend variable was created, and trends in measures of interest were tested using appropriate cross-correlations. Re-analysis of the data did not support the findings of the original study. The original study does not contradict the general findings of the national and international literature that the demand for alcohol is sensitive to increases in price and does not provide evidence for the assertion that, other factors being equal, price controls on the availability of alcohol in Indigenous communities are likely to be ineffective.