Heterogeneity in Alcohol Consumption: The Case of Beer, Wine and Spirits in Australia

Abstract

This paper examines Australians' participation in beer, wine and spirits consumption using a trivariate probit model and unit-record data from the National Drug Strategy Household Surveys. It estimates the effects of social, economic and demographic factors on an individual's decisions of alcohol participation. The trivariate probit formulation allows for the potential correlation across the demand for the three products through unobserved personal characteristics. All three beverages are shown to have negative own-price elasticities and to be substitutes in participation. An alarming proportion of young Australians are found to be drinking spirits regularly due to the increasing popularity of pre-mixed sweet drinks.

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