Estimation of individual demand for alcohol

According to the authors, the problem of alcoholisation in the Russian society is considerably worse off than before and is even aggravating in spite of the growing economy. The level of alcohol consumption in Russia is one of the highest in the world. The consequences for the society are very serious – about a third of all deaths in the country are directly or indirectly caused by alcohol.

The project studies the demand for alcohol by means of econometric analysis based on individual data from RLMS, the longitudinal survey of the representative sample of the Russian population.

The authors find that:

• almost half of the consumed alcohol is produced illegally
• most of the population in rural areas, including women and children, is using alcohol excessively
• raising prices for vodka causes strong substitution effect – vodka is replaced with moonshine
• higher income results in lower intake of low quality alcohol and at the same time higher consumption of vodka, wine and beer.

In the authors' opinion, with the existing strong lobby of alcohol producers and the prevalence of corruption it is hard to find a reasonable public alcohol policy. Nevertheless the paper offers some recommendations:

• gradually raise alcohol prices, especially for alcohol with high ethanol content
• reduce the number of trading places
• reduce the working hours of places selling alcohol
• increase the minimum purchase age of consumers
• introduce severe punishment for drinking in public places and at work
• introduce severe punishment for driving and committing felonies under the influence of alcohol.