Price Elasticities

Price elasticity shows the relationship between price changes and consumption.  Larger elasticities will show that a greater increase in price leads to a greater drop in consumption volume.

Research suggests a range of price elasticities for alcoholic beverages.  Therefore, we provide two well-regarded estimates: the Leung and Phelps (1993) statistic provides a conservative estimate of the projected increased revenue; the Wagenaar (2009) statistic is based on more recent U.S. data.  For instance, using the Leung and Phelps elasticity measure will provide a smaller revenue increase and a larger drop in alcohol consumption than the Wagenaar estimate.

Leung and Phelps (1993):

BEER: -0.30
WINE: -1.00
LIQUOR: -1.50

Wagenaar (2009):

BEER: -0.46
WINE: -0.69
LIQUOR: -0.80