In the beginning of the subject it was difficult to determine a research topic that was both interesting and could be done in the short time frame of the semester. It was surprisingly time consuming finding a topic that fit these two criteria. The lab session in class was useful in explaining how you can refine your search criteria to look for results that are more tailor-made to the topic of research. This made it a much faster process of scanning through large portions of information to find relevant material. A lot of the research involved in finding an appropriate topic felt as if it was for nothing when you would invest a lot of time in one topic to find that you could not pursue any new analysis in the subject or just did not have the resources to conduct a study in the area. Finally finding a research gap that I could study presented the initial momentum for writing the research proposal. Once finding a research gap it seemed more rewarding reading papers that I could eventually use to present my literature review for the research proposal component of the subject.

After presenting the research proposal the analysis component of the subject had seemingly the same challenges. That is some days the analysis would be straightforward and at the end of the day there would be a sense of accomplishment. However other days were less straightforward when issues occurred with the data or the analysis hadn’t ran as smoothly as you imagined it to. The most difficult part was that the challenges were almost completely new. I’ve not had the same type of challenges in other subjects. For example when you study for an exam the hours you devote to studying will always lead to accomplishing something whether it be learning a topic or refining knowledge. With research the feeling of accomplishment is not always present after the completion of work.

Public speaking for the research proposal was the biggest challenge I faced so far in the subject. I hadn’t had a lot of opportunities to practice public speaking previously at university. I found it less stressful to prepare the research proposal than giving a ten minute presentation on it. Major triumphs include finding a research gap or anytime there is a wall is broken through in the research adding momentum to the task. After hours spent on a problem and making seemingly no progress with the research, every time this kind of problem is solved I consider a mini triumph, as it is the most rewarding element to conducting the work.  The two biggest learning experiences from the subject were presenting the research proposal and learning how to refine search results using research tools provided by the university.

The main comments I received about my research were suggestions toward particular ways I could add complexity to my analysis. It was suggested that rather than just investigating the effect of advertisement, education and price has on alcohol consumption in Australia, I could also investigate this effect for different alcohol types. It was also suggested that I could possibly account for different age groups and how these explanatory variables effect alcohol consumption for younger and older consumers.

The largest challenge going forward will be collecting advertising expenditure information to use as a proxy for measuring the level of advertising consumers were exposed to in a given period. This data will come from the annual reports of companies that produce alcoholic beverages such as Victoria Bitter, Carlton, and Great Northern. This task will be time intensive which is why it is important to focus on it early into working toward project completion. Given the short time frame of the subject the tasks that take up the most time are the most challenging given the short time frame.

As this will be my largest perceived challenge this far I plan to start doing this task first. Then I will have all the data I need to start to run a regression analysis testing the effect education, advertising and price has on alcohol consumption in Australia. Given that we are just now having our midsession break it is my plan to utilize this time off to conduct a large portion of the legwork for my research. The goal will be to have a substantial amount of results that I can begin to write the final report. If I find that I have enough time, I can add to the complexity of my research by conducting research in the areas suggested to me by the professor during my research proposal.

This week I’ve been mostly preoccupied with the literature review for my research proposal. I’ve done my best to research the most relevant and up to date papers that have been published in the same field as my topic area. There is a growing amount of research being conducted in the area of consumption of addictive substances and response to changes in price. This is mainly due to the fact that currently, the only widely used method to curve alcohol consumption and other addictive substances is through taxation. That is, via taxation governments increase the price of alcohol with the goal of reducing alcohol consumption and more importantly reduce the external costs placed on the economy such as health related issues. The attempts to reduce alcohol consumption have so far proved to be futile with nearly twenty five million adults reported to have an alcohol dependency and five hundred thousand deaths on average per year occurring from alcohol and cigarettes (Bernheim & Rangel, 2004). It is well established in economic theory that addictive substances such as alcohol feature price inelasticity. However, the price elasticity of alcohol in previous studies has not fully explained why the taxation of alcohol has not been successful in changing consumption behaviour. Moreover, taxation of alcohol has been found to not have a substantial impact on external costs associated with alcohol consumption.

The question is then what is a more efficient way of reducing alcohol consumption and external costs associated with heavy consumption? Gallet (2007) identified two main factors that explain why taxation does not have a considerable effect on the consumption of alcohol. Number one was price elasticity varied over types of alcoholic beverages. Number two was that younger consumers are less price sensitive than older consumers. Meaning that taxation is relatively ineffective for solving problems associated with drinking among young people. Furthermore, taxation could be improved by applying different tax rates to alcoholic beverages that are more price inelastic. Manning et al. (1995) found that moderate consumers are more responsive to price than those who are heavy consumers. This means that as taxes increase those who produce the external costs (heavy consumers) are relatively less affected than those who produce no external costs (moderate consumers).

Amongst the current research there has been no studies done on the different effects that advertising has on alcohol consumption between moderate and heavy consumers of alcohol in Australia. The point of conducting a study such as this will be to find out if advertising effects heavy consumers more than moderate consumers. If so then reducing alcohol advertisement and providing education on safe levels of alcohol consumption may be more viable avenues to reducing the external costs associated with alcohol.

References:

Bernheim, BD & Rangel, A 2004, ‘Addiction and Cue-Triggered Decision Processes’, American Economic Review, vol. 94, no. 5, pp. 1558–1590

Gallet, CA 2007, ‘The Demand for Alcohol: A Meta-analysis of Elasticities’, Australian Journal of Agricultural and Resource Economics, vol. 51, no. 2, pp. 121–135

Manning, WG, Blumberg, L & Moulton, LH 1995, ‘The Demand for Alcohol: The Differential Response to Price’, Journal of Health Economics, vol. 14, no. 2, pp. 123–148

Continuing on from last week the goal has been to reach a point of focus within the research topic. The idea from last week was to conduct an analysis on the long run effects of education and price on alcohol consumption patterns nationally and then compare these results across countries. This was to figure out what countries have the best policies in place to combat heavy consumption of alcohol and the health related issues associated with it. There is an importance for conducting this research because of the burden excessive alcohol consumption has on individual’s health. This also has broader economic implications on GDP as people’s health and wellbeing effect whether or not people can be included in the labor force. However after further consideration this project proves to be too time consuming to complete over thirteen weeks. So the main adversity I’ve had to overcome this week is finding a research question that I have access to data for and can complete in a timely manner.

Luckily this week I came across a research paper, “A Behavioral Economic Model of Alcohol Advertising and Price”, that still has the same policy implications as the study I just previously mentioned. The authors Henry Saffer, Dhaval Dave and Michael Grossman present an empirical study on the behavioural effects of television advertising and price on alcohol consumption in the United States. I’ve decided to conduct similar research but in an Australian context. Similar data as to what was collected in the US I’ve found for Australian consumers. Alcohol consumption patterns is well recorded by the Australian Bureau of Statistics. However the only issue with replicating the analysis done in this paper is that the researchers purchased advertising data from alcohol producers to use in the study. For obvious reasons I cannot do this for my own research so I’ve decided to use the cost of advertising for alcohol producers as a proxy for measuring the level of advertising alcohol consumers are exposed to.

Moving forward I will need to start conducting my analysis. This will involve running a regression that measures the effect of price, advertising and other factors such as socioeconomic status, on the consumption of alcohol. To do this Ill have to place my consumer data and data for my proxy into excel spreadsheets and conduct the regression analysis using Eviews.

In the past three weeks of research the biggest challenge that has been faced thus far has been finding a research gap. It has been difficult to find an appropriate area of research that can be both completed in the short time period of 13 weeks and provide new information to an area of interest.

Currently there is a considerable amount of research investigating long-run trends of alcohol consumption overtime. The research aims to find what type of variables influence alcohol consumption with the aim of lowering the average rate of consumption. For example, education and price are two key variables affecting the overall consumption of alcohol in countries such as the US and Australia. Each country strives to lower the amount of alcohol consumed year to year, however they are not identical in their methods of achieving this goal. Whilst there has been extensive work done in this area of research, a multi country comparison of how these variables affect alcohol consumption has not been done. By comparing results from different countries I hope to identify what particular methods work best in reducing alcohol consumption and propose a universal method for reducing alcohol consumption.

Research into alcohol consumption and the factors that affect it are important for public health. Investigating factors that lower the consumption of alcohol can lead to efficient policy that reduce alcohol related health issues such as disease.

During my studies at UOW I’ve studied statistics and econometrics. These classes will be of use in assisting in the extrapolation of data, running regression type models and deciphering any results at the conclusion of the research. Also having lived in both Australia and the US I have an understanding of the culture surrounding alcohol consumption, particularly among young people.

Moving forward now the goal is to find a particular model used by researchers to analyse alcohol consumption levels overtime and their response to dependent variables. Once I’ve found the model I can proceed to start the analytical section of research and produce results. This will be the first independent research project I’ve done over the course of my time at UOW. The challenges will be implicit in the unfamiliarity of how best to proceed with the research. Do I have enough time to answer the questions asked? Is the model I’ve chosen appropriate to work with given my level of ability as a researcher? Will there be enough data present to effectively answer research questions?

Given that this entire process will be new territory also means that there is a large space for learning and skill development. I will have more time to work with Eviews in analysis of data and revisit some of the skills picked up in Econ339.