The Passive Drinking Effect: A Collective Demand Application. WP Series University of Verona Department of Economics (ISSN: 2036-2919 (paper), 2036-4679 (online)), 05/2012

This paper investigates whether consumption of alcoholic beverages has a passive effect on the distribution of resources among household members. The term passive drinking evokes the negative impact that the drinking behavior of a household member may have on other household members’ well-being. To investigate this issue we rely on the collective framework and estimate a structural collective demand system using Italian micro data. The results show that a high level of alcohol consumption of one household member significantly affects the allocation of household resources and may have quasi-external effects. Public costs that are transferred to other household members should be taken into account when designing social policies.