Determinants of Household Expenditures on Alcohol

Abstract

This paper examines the determinants of household alcohol expenditures by using a nonnormal and heteroscedastic double‐hurdle model to accommodate zero observations in the sample. The model is a generalization of the double‐hurdle model estimated in previous studies of alcohol consumption. We also examine the effects of explanatory variables by calculating and decomposing the elasticities. Findings support the use of a more generalized error distribution. Income, region, education, and household demographics are among the significant determinants of alcohol expenditures.

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