Price elasticities of alcohol demand: evidence from Russia

In this paper, we estimate price elasticities of demand of several types of alcoholic drinks, using 14 rounds of data from the Russia Longitudinal Monitoring Survey-HSE, collected from 1994 until 2009. We deal with potential confounding problems by taking advantage of a large number of control variables, as well as by estimating community fixed effect models. All in all, although alcohol prices do appear to influence consumption behaviour in Russia, in most cases the size of effect is modest. The finding that two particularly problematic drinks-cheap vodka and fortified wine-are substitute goods also suggests that increasing their prices may not lead to smaller alcohol consumption. Therefore, any alcohol pricing policies in Russia must be supplemented with other measures, such as restrictions on numbers of sales outlets or their opening times.