An Empirical Analysis of Alcohol Addiction: Results from the Monitoring the Future Panels

Economic Inquiry, Vol. XXXVI, No. 1 (January 1998)

Posted: 1 Mar 1998

See all articles by Michael Grossman

Michael Grossman

National Bureau of Economic Research (NBER), NY Office; CUNY The Graduate Center - Department of Economics

Frank J. Chaloupka

University of Illinois at Chicago - Department of Economics; National Bureau of Economic Research (NBER)

Ismail Sirtalan

Greater New York Hospital Association

Multiple version iconThere are 2 versions of this paper

Abstract

In a panel of young adults, we find that alcohol consumption is addictive in the sense that increases in past or future consumption cause current consumption to rise. The positive and significant future consumption effect is consistent with the hypothesis of rational addiction. The long-run price elasticity is approximately 60% larger than the short-run price elasticity and twice as large as the elasticity that ignores addiction. Thus, a tax hike policy to curtail consumption or abuse may not have a favorable cost-benefit ratio unless it is based on the long-run price elasticity.

JEL Classification: I10

Suggested Citation

Grossman, Michael and Chaloupka, Frank J. and Sirtalan, Ismail, An Empirical Analysis of Alcohol Addiction: Results from the Monitoring the Future Panels. Economic Inquiry, Vol. XXXVI, No. 1 (January 1998). Available at SSRN: https://ssrn.com/abstract=61269

Michael Grossman (Contact Author)

National Bureau of Economic Research (NBER), NY Office ( email )

5 Hanover Square
16th Floor, Suite 1602
New York, NY 10004-2630
United States
917-261-3127 (Phone)
917-426-7105 (Fax)

HOME PAGE: http://mgrossman.ws.gc.cuny.edu

CUNY The Graduate Center - Department of Economics ( email )

365 Fifth Avenue, 5th Floor
New York, NY 10016
United States
212-817-7959 (Phone)
212-817-1597 (Fax)

HOME PAGE: http://mgrossman.ws.gc.cuny.edu

Frank J. Chaloupka

University of Illinois at Chicago - Department of Economics ( email )

m/c 144 601 South Morgan St., Room 2103
Chicago, IL 60607-7121
United States
312-413-2367 (Phone)
312-996-3344 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Ismail Sirtalan

Greater New York Hospital Association ( email )

555 W. 57th St., 15th Floor
New York, NY 10019
United States

Register to save articles to
your library

Register

Paper statistics

Abstract Views
598
PlumX Metrics