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The Effect of Liquor Taxes on Heavy Drinking

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Author Info
Philip J. Cook
George Tauchen

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Abstract

In this article we present the strongest evidence to date that chronic heavy drinkers' consumption is responsive to changes in the price of liquor. We estimate that an increase in the liquor excise tax by one dollar (1967 prices) per proof gallon reduces the liver cirrhosis mortality rate by 5.4% in the short run and by perhaps twice that amount in the long run. (The liver cirrhosis mortality rate is a reliable proxy for the prevalence of chronic excess consumption.) Our estimate is based on an analysis of covariance of annual state-level data, for a 16-year panel of 30 states, with state excise taxes and per capita income as the covariates. Of course, our estimate is not sufficient to determine whether an increase in the liquor tax is worthwhile, much less to determine an "optimal" tax. It is, however, an important datum for making these determinations.

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Publisher Info
Article provided by The RAND Corporation in its journal Bell Journal of Economics.

Volume (Year): 13 (1982)
Issue (Month): 2 (Autumn)
Pages: 379-390
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Handle: RePEc:rje:bellje:v:13:y:1982:i:autumn:p:379-390

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  3. Jeffrey A. Miron & Jeffrey Zwiebel, 1991. "Alcohol Consumption During Prohibition," NBER Working Papers 3675, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Philip J. Cook & Michael J. Moore, 2001. "Environment and Persistence in Youthful Drinking Patterns," NBER Chapters, in: Risky Behavior among Youths: An Economic Analysis, pages 375-438 National Bureau of Economic Research, Inc. [Downloadable!]
  5. Philip J. Cook & Jan Ostermann & Frank A. Sloan, 2005. "Are Alcohol Excise Taxes Good For Us? Short and Long-Term Effects on Mortality Rates," NBER Working Papers 11138, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Steven D. Levitt & Jack Porter, 1999. "Estimating the Effect of Alcohol on Driver Risk Using Only Fatal Accident Statistics," NBER Working Papers 6944, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Henry Saffer, 1992. "Alcohol Advertising Bans and Alcohol Abuse: An International Perspective," NBER Working Papers 3052, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Michael Grossman, 2004. "Individual Behaviors and Substance Use: The Role of Price," NBER Working Papers 10948, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Donald S. Kenkel & Robert R. Reed III & Ping Wang, 2002. "Rational Addiction, Peer Externalities and Long Run Effects of Public Policy," NBER Working Papers 9249, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. Donald S. Kenkel & Joseph V. Terza, 2001. "The effect of physician advice on alcohol consumption: count regression with an endogenous treatment effect," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(2), pages 165-184. [Downloadable!]
  15. Angela K. Dills & Jeffrey K. Miron, 2003. "Alcohol Prohibition and Cirrhosis," NBER Working Papers 9681, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  16. Michael J. Moore & James W. Hughes, 2000. "The Health Care Consequences of Smoking and its Regulation," NBER Working Papers 7979, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  17. Parry, Ian W.H. & Laxminarayan, Ramanan & West, Sarah E., 2006. "Fiscal and Externality Rationales for Alcohol Taxes," Discussion Papers dp-06-51, Resources For the Future. [Downloadable!]
  18. Dhaval Dave & Robert Kaestner, 2001. "Alcohol Taxes and Labor Market Outcomes," NBER Working Papers 8562, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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