U.S. Consumer Demand for Alcoholic Beverages: Cross‐Section Estimation of Demographic and Economic Effects

Abstract

Much research has been done on the control and taxation of alcoholic beverages (Ornstein; Atkinson, Gomulka, and Stem; Heien and Pompelli; Johnson et al.; Blaylock and Blisard). The unusual status and attention that alcoholic beverages have attracted is due mainly to their unique characteristics in consumer utilities and social concerns. Consumption of alcoholic beverages has been viewed not only in terms of its effect on individual utility maximization, but also in terms of its bearing on social concerns and government revenue. Although there is empirical evidence suggesting that moderate alcohol consumption lowers the risk of coronary heart disease (e.g. Maclure; Moore and Pearson), social concerns are based on the consequences of chronic and acute alcohol abuse. Because of these concerns, they are traditionally subject to some form of social control. One important form of control is the excise tax which contributes significantly to government revenue. The estimation of demand elasticities and the effects of household characteristic variables on alcohol demand provide important information for the formulation of public policies. However, it is with respect to current fiscal deficits and as a means to finance the Clinton administration's