More recently, Nelson (1997) reported relatively unresponsive price elasticities of −0.16 for beer,−0.58 for wine, and −0.39 for spirits, with −0.52 for an overall price elasticity. His analysis also provided possible explanations for the decline in per capita consumption of alcohol (see figure 2) despite a decline in the real prices of alcoholic beverages in the United States in the same period (see figure 1). Nelson’s study showed that the demographic shift to an older population—which consumes less alcohol—outweighed the impact of falling real prices. Other factors, such as a shift to healthier lifestyles, also may help explain the decrease in consumption.
