Abstract
Vietnam’s battle with the consequences of alcohol consumption is an ongoing concern for policymakers. A research article published in BMJ Open addresses this challenge by presenting empirical data on the responsiveness of beer and wine demand to changes in prices and taxes. Here, we provide a detailed discussion on the study’s findings, methodology, and implications for public health and policy.
Among Southeast Asian countries, Vietnam stands out for its vibrant culture, emerging economy, and unfortunately, its increasing struggle with alcohol consumption. A recent study published in BMJ Open, titled “Do beer and wine respond to price and tax changes in Vietnam? Evidence from the Vietnam Household Living Standards Survey” (Chelwa et al., 2020; DOI: 10.1136/bmjopen-2018-027076), sheds light on the economics of alcohol demand in the country. The research hails as the first of its kind, providing estimates of price and expenditure elasticities specific to beer and wine, offering evidence necessary for devising policy measures aimed at curbing alcohol-related issues.
Introduction
The study’s findings emerge in a context where alcohol consumption has been linked to numerous social problems. The General Statistics Office of Vietnam’s report on family violence underscores the role alcohol plays in domestic disputes. Mirroring the significance of the World Health Organization’s Global Status Report on Alcohol and Health, which highlights the worldwide health burden attributable to alcohol, Vietnam is not immune to these challenges.
Methodology
Taking a rigorous econometric route, the study employs the Almost Ideal Demand System (AIDS) linear approximation, utilizing data from the Vietnam Household Living Standards Survey (VHLSS) for 2010, 2012, and 2014. The AIDS model, introduced by economists Deaton and Muellbauer (1980), serves as a robust framework allowing the assessment of how consumers allocate their expenditure among different goods, in this case, beer and wine.
Findings
Central to the paper’s findings are the calculated average price elasticities of beer and wine, quantified at -0.283 and -0.317, respectively. This indicates that a 1% increase in the prices of these drinks leads to a decrease in consumption of approximately 0.28% for beer and 0.32% for wine. These elasticities exhibit an inelastic demand, meaning that price hikes in these alcoholic beverages only marginally reduce their consumption.
Similarly, the study identifies the average expenditure elasticities for beer and wine as 0.401 and 0.156, respectively, suggesting that increases in consumers’ expenditures lead to higher consumption of these products, with beer being more sensitive to such changes than wine.
Policy Implications
The key takeaway is the inelastic nature of alcohol demand, indicating that consumers are not highly responsive to price changes. This finding validates the public health standpoint that advocates for increased taxation on alcoholic beverages – a measure that could potentially deter alcohol consumption and thus reduce its associated health risks. Economic literature, like that from Gallet (2007), consistently shows that higher taxes on alcohol can have an influential effect on its consumption, particularly in contexts where demand is price inelastic.
Context in Vietnam
Vietnam’s alcohol industry, under the scrutiny of the Ministry of Industry and Trade’s development planning reports, is significant. Marketing and promotion practices, combined with affordable pricing, have historically played substantial roles in molding consumption patterns. The Ministry’s reports and national surveys point towards the compelling need to address alcohol consumption from a policy standpoint, especially considering forecasted growth projected until 2025.
Critical Analysis
Nevertheless, the study is not without its critics. Some argue that focusing solely on price and tax measures is a myopic view of addressing complex socio-economic issues associated with alcohol abuse. Initiatives focusing on education, social norms, and access to healthcare require equal attention. There’s a consensus in the literature that multifaceted approaches, including policy measures like those recommended by Babor et al. (2010), could yield more sustainable results.
Integration with Global Studies
These findings align with similar studies conducted in different contexts. Cross-country analyses by Anderson et al. (2009) and Bundit et al. (2013) demonstrate that alcohol demand elasticities play a critical role in shaping global alcohol policies. Vietnam’s situation offers an intriguing comparison, showcasing unique demand-side dynamics shaped by cultural, economic, and regulatory factors.
The Path Forward
Moving forward, Vietnam must balance its economic interests tied to the alcohol industry with its commitments to public health. Policy interventions like taxation, while effective, must be coupled with other strategies to achieve the desired outcomes – reduced alcohol consumption and subsequent health hazards. The evidence laid out can propel government authorities, civil society, and the healthcare sector to engage in a concerted effort that harmonizes economic and public health goals.
Conclusions
The publication in BMJ Open is a seminal contribution in understanding the price dynamics of alcohol in Vietnam. It carves a path for evidence-based policy and opens doors for more nuanced research on socioeconomic determinants influencing alcohol demand.
References
1. Chelwa, G., Toan, P. N., Hien, N. T. T., Thu, L. T., & Anh, P. T. H., Ross, H. (2020). Do beer and wine respond to price and tax changes in Vietnam? Evidence from the Vietnam Household Living Standards Survey. BMJ Open, 9(5), e027076. https://doi.org/10.1136/bmjopen-2018-027076
2. Ministry of Industry and Trade (MOIT). (2008). The evaluation report for the construction industry development planning: Beer and Wine Beverage in Vietnam to 2015, vision 2025.
3. General Statistics Office. (2010). Vietnam national survey of family violence.
4. World Health Organization. (2014). Global status report on alcohol and health 2014. Geneva.
5. Deaton, A. S., & Muellbauer, J. (1980a). An Almost Ideal Demand System. American Economics Review, 70, 312–326.
6. Anderson, P., Chisholm, D., & Fuhr, D. C. (2009). Effectiveness and cost-effectiveness of policies and programmes to reduce the harm caused by alcohol. Lancet, 373, 2234–46. https://doi.org/10.1016/S0140-6736(09)60744-3
Keywords
1. Alcohol consumption in Vietnam
2. Alcohol price elasticity Vietnam
3. Alcohol tax policy Vietnam
4. Vietnam alcohol demand system
5. Public health alcohol Vietnam