Individual heterogeneity in alcohol consumption: The case of beer, wine and spirits in Australia

This paper examines the effects of socioeconomic and demographic factors on Australian individuals' participation in beer, wine and spirits consumption using unit-record data during 1991-2001. A trivariate probit formulation allows for participation in the three alcoholic beverages to be modelled jointly accounting for correlation via unobserved personal characteristics. Own and cross price elasticities are estimated for both unconditional and conditional participation probabilities. While the three beverages are commonly considered closely related economic goods, we find that they relate to rather heterogenous population groups and the correlations via the unobservable characteristics are low in magnitude.