A microeconometric model analysis of US consumer demand for alcoholic beverages

This paper discusses the specification and estimation of a two-stage budgeting consumer demand for alcoholic beverages using 1987–88 USDA individual and household food-consumption survey data. The upper level first-stage budgeting decision is modelled via a gamma-tobit model. The lower level second-stage budgeting allocates alcohol expenditure via a synthetic-demand system for beer, spirits and wine. The synthetic system is constructed via a normalized linear combination of the level Rotterdam, CBS and an AIDS equivalent model. Data on individual three-day alcohol consumption from the individual food-intake survey are used for analysis, while price and household-characteristics information are obtained from the house-hold food-intake survey. The results show that some individual- and household-characteristic variables, as well as economic variables, have significant impacts on consumer demand for alcoholic beverages.