Empirical Estimation of Individual Demand for Alcohol in Russia

Student: Orlov Denis

Faculty: International College of Economics and Finance

Educational Programme: Financial Economics (Master)

Final Grade: 8

Year of Graduation: 2017

In this research we focus on estimating the own-price and cross-price elasticities of alcohol consumption of different kind of beverages (beer, vodka, wine and moonshine) on individuals in Russian Federation using RLMS data. In particular, we focus on dealing with censoring of zero alcohol consumption and catching up the heterogeneity of price elasticities among the light, moderate and hard drinkers. Quantile regression along with Random effects censored OLS are used. It is found that if censoring is not taken into account the obtained price elasticities are severely upward biased; With the help of quantile regression approach we set up that there is a huge difference in price sensitivity between various kind of drinkers.

Full text (added June 4, 2017)

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