Factors Affecting Alcohol Purchase Decisions and Expenditures: A Sample Selection Analysis by Ethnicity in Malaysia

Heckman’s sample selection model was applied to data from the Malaysian Household Expenditure Survey 2004/2005 to examine the factors influencing the likelihood of purchasing and the amount spent on alcohol in Malaysia. Results of the marginal effects suggest that while socio-demographic factors are important determinants of household purchase decisions and expenditure levels on alcohol in Malaysia, the effects vary across ethnic groups. Specifically, although education had a significant but modest impact in reducing the probability of alcohol purchases and expenditure levels among ethnic Chinese households, this effect was not evident among the ethnic Indians and other races. While increasing household size lowered the likelihood of purchasing alcohol and its expenditure levels for all ethnic groups, the reinforcing effects of both income and gender were relevant only for ethnic Chinese and Indian households. Last, urban Indian households were less likely to purchase alcohol and spend less compared to rural Indian households.

Rodolfo M. Nayga Jr.Email:

---

Andrew K. G. Tan   is Senior Lecturer of Economics at Universiti Sains Malaysia. Besides teaching Microeconomics and Environmental Economics, he conducts research in the areas of consumer-household demand, health economics and non-market goods. Steven T. Yen   is Associate Professor of Agricultural Economics at the University of Tennessee, Knoxville. Professor Yen has published in consumer demand analysis and applied micro-econometrics. His current research areas include addressing the effects of government programs on children’s welfare and the economics of food demand, nutrition, health, and food safety. Rodolfo M. Nayga, Jr.   is Professor and Tyson Chair in Food Policy Economics in the Department of Agricultural Economics and Agribusiness at the University of Arkansas. Prior to joining the University of Arkansas, he was a professor at Texas A&M University and Rutgers University. His research interests include nutrition and health economics, food policy, and behavioral economics.