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The virtuous tax: Lifesaving and crime-prevention effects of the 1991 federal alcohol-tax increase

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  • Cook, Philip J.
  • Durrance, Christine Piette
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    Abstract

    The last time that federal excise taxes on alcoholic beverages were increased was 1991. The changes were larger than the typical state-level changes that have been used to study price effects, but the consequences have not been assessed due to the lack of a control group. Here we develop and implement a novel method for utilizing interstate heterogeneity to estimate the aggregate effects of a federal tax increase on rates of injury fatality and crime. We provide evidence that the relative importance of alcohol in violence and injury rates is directly related to per capita consumption, and build on that finding to generate estimates. A conservative estimate is that the federal tax (which increased alcohol prices by 6% initially) reduced injury deaths by 4.5% (6480 deaths), in 1991, and had a still larger effect on violent crime.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Health Economics.

    Volume (Year): 32 (2013)
    Issue (Month): 1 ()
    Pages: 261-267

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    Handle: RePEc:eee:jhecon:v:32:y:2013:i:1:p:261-267

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    Web page: http://www.elsevier.com/locate/inca/505560

    Related research

    Keywords: Alcohol; Injury; Crime; Excises; Quasi-experimental;

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    References

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    1. David Neumark & DMark Schweitzer & DaWilliam Wascher, 2004. "Minimum Wage Effects throughout the Wage Distribution," Journal of Human Resources, University of Wisconsin Press, vol. 39(2).
    2. Steven D. Levitt & Jack Porter, 2001. "How Dangerous Are Drinking Drivers?," Journal of Political Economy, University of Chicago Press, vol. 109(6), pages 1198-1237, December.
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    4. Chesson, Harrell & Harrison, Paul & Kassler, William J, 2000. "Sex Under the Influence: The Effect of Alcohol Policy on Sexually Transmitted Disease Rates in the United States," Journal of Law and Economics, University of Chicago Press, vol. 43(1), pages 215-38, April.
    5. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes, 2003. "What Mean Impacts Miss: Distributional Effects of Welfare Reform Experiments," Working Papers 109, RAND Corporation Publications Department.
    6. Philip J. Cook, 2007. "Introduction to Paying the Tab: The Costs and Benefits of Alcohol Control
      [Paying the Tab: The Costs and Benefits of Alcohol Control]
      ," Introductory Chapters, Princeton University Press.
    7. Sara Markowitz, 1999. "The Price of Alcohol, Wife Abuse, and Husband Abuse," NBER Working Papers 6916, National Bureau of Economic Research, Inc.
    8. Philip J. Cook & George Tauchen, 1984. "The Effect of Minimum Drinking Age Legislation on Youthful Auto Fatalities, 1970-1977," The Journal of Legal Studies, University of Chicago Press, vol. 13(1), pages 169-190, January.
    9. Rebecca M. Blank & Robert F. Schoeni, 2003. "Changes in the Distribution of Children's Family Income over the 1990's," American Economic Review, American Economic Association, vol. 93(2), pages 304-308, May.
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    11. Jeffrey DeSimone, 1999. "The Effect of Cocaine Prices on Crime," Working Papers 9907, East Carolina University, Department of Economics.
    12. Matthews, Kent & Shepherd, Jonathan & Sivarajasingham, Vaseekaran, 2006. "Violence-related injury and the Price of Beer in England and Wales," Cardiff Economics Working Papers E2006/3, Cardiff University, Cardiff Business School, Economics Section.
    13. Young, Douglas J & Bieli´nska-Kwapisz, Agnieszka, 2002. "Alcohol Taxes and Beverage Prices," National Tax Journal, National Tax Association, vol. 55(N. 1), pages 57-73, March.
    14. Markowitz, Sara & Grossman, Michael, 2000. "The effects of beer taxes on physical child abuse," Journal of Health Economics, Elsevier, vol. 19(2), pages 271-282, March.
    15. Christopher Carpenter & Carlos Dobkin, 2011. "The Minimum Legal Drinking Age and Public Health," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 133-56, Spring.
    16. Markowitz, Sara, 2005. "Alcohol, Drugs and Violent Crime," International Review of Law and Economics, Elsevier, vol. 25(1), pages 20-44, March.
    17. Gary S. Becker & Kevin M. Murphy, 1986. "A Theory of Rational Addiction," University of Chicago - George G. Stigler Center for Study of Economy and State 41, Chicago - Center for Study of Economy and State.
    18. Durrance, Christine Piette & Golden, Shelley & Perreira, Krista & Cook, Philip, 2011. "Taxing sin and saving lives: Can alcohol taxation reduce female homicides?," Social Science & Medicine, Elsevier, vol. 73(1), pages 169-176, July.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Why law enforcement was powerless to stop Elliot Rodger from buying guns
      by David Cho in Wonkblog on 2014-05-29 20:09:15
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    Cited by:
    1. Arlen Guarin & Carlos Medina & Jorge Andres Tamayo, 2013. "The Effects of Punishment of Crime in Colombia on Deterrence, Incapacitation, and Human Capital Formation," Research Department Publications IDB-WP-420, Inter-American Development Bank, Research Department.
    2. Daniel Cerqueira & João Manoel Pinho de Mello, 2013. "Evaluating a National Anti-Firearm Law and Estimating the Causal Effect of Guns on Crime," Textos para discussão 607, Department of Economics PUC-Rio (Brazil).
    3. LUYTEN, Jeroen & KESSELS, Roselinde & GOOS, Peter & BEUTELS, Philippe, 2013. "Public preferences for prioritizing preventive and curative health care interventions: A discrete choice experiment," Working Papers 2013032, University of Antwerp, Faculty of Applied Economics.

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