title: The Dynamic Effects of Changes in Prices and Affordability on Alcohol Consumption: An Impulse Response Analysis.
abstract: OBJECTIVE
  To investigate how changes in alcohol price and affordability are related to aggregate level alcohol consumption in Australia to help to inform effective price and tax policy to influence consumption.
  
  
  METHODS
  Annual time series data between 1974 and 2012 on price and per-capita consumption for beer, wine and spirits and average weekly income were collected from the Australian Bureau of Statistics. Using a Vector Autoregressive model and impulse response analysis, the dynamic responses of alcohol consumption to changes in alcohol prices and affordability were estimated.
  
  
  RESULTS
  Alcohol consumption in Australia was negatively associated with alcohol price and positively associated with the affordability of alcohol. The results of the impulse response analysis suggest that a 10% increase in the alcohol price was associated with a 2% decrease in the population-level alcohol consumption in the following year, with further, diminishing, effects up to year 8, leading to an overall 6% reduction in total consumption. In contrast, when alcohol affordability increased, per-capita alcohol consumption increased over the following 6 years.
  
  
  CONCLUSIONS
  Our findings suggest that increasing alcohol prices or taxes can help to reduce alcohol consumption at the population level in Australia. However, the impact of affordability in our findings highlights that pricing policies need to consider increases in income to ensure effectiveness. Alcohol price policy should only cautiously focus on individual beverage types, because increasing the price of one beverage generally leads to an increase in consumption of substitutes.
authors.affiliation: Centre for Alcohol Policy Research, Turning Point, Melbourne, VIC, Australia Eastern Health Clinical School, Monash University, Melbourne, VIC, Australia jasonj@turningpoint.org.au.
authors.forename: Heng
authors.initials: H
authors.lastname: Jiang
authors.affiliation: Centre for Alcohol Policy Research, Turning Point, Melbourne, VIC, Australia Drug Policy Modelling Program, National Drug and Alcohol Research Centre, The University of New South Wales, Sydney, NSW, Australia.
authors.forename: Michael
authors.initials: M
authors.lastname: Livingston
mesh_terms: D000428:Alcohol Drinking / Q000191:economics* / Q000453:epidemiology* / Q000517:prevention & control / Q000639:trends; D000434:Alcoholic Beverages / Q000191:economics*; D001315:Australia; D003132:Commerce / Q000191:economics* / Q000639:trends; D006801:Humans; D007175:Impulsive Behavior; D017059:Models, Econometric