ABSTRACT
This chapter reviews some of the general economic issues related to alcohol. One of the great difficulties with modern econometrics, particularly for those with a limited knowledge of mathematics, is that the models and the estimation methods have become more and more complex. The estimates of price and income elasticities for alcoholic drink and other commodities that Professor Stone published in his 1945 paper were, apparently, computed by hand, so that each multiple regression took several hours, if not days, to calculate. In the pre-war period, the price of beer and spirits remained fairly constant over the whole period in money terms, but the general price level fell, so that the relative price of drink rose and consumption declined. In contrast to the post-war period, it seems that income was not a major influence on consumption but, as income levels changed very little in this period, the estimate of the income elasticity may not be entirely reliable.
