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Effects of Alcoholic Beverage Prices and Legal Drinking Ages on Youth Alcohol Use

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  • Douglas Coate
  • Michael Grossman

Abstract

Based on an analysis of the second National Health and Nutrition Examination Survey, conducted between 1976 and 1980, we find that the frequency of the consumption of beer, the most popular alcoholic beverage among youths, is inversely related to the real price of beer and to the minimum legal age for its purchase and consumption. The negative price and legal drinking age effects are by no means limited to reductions in the fraction of youths who consume beer infrequently (less than once a week). Instead, the fractions of youths who consume beer fairly frequently (1-3times a week) and frequently (4-7 times a week) fall more in absolute or percentage terms than the fraction of infrequent drinkers when price or the drinking age rises. These are striking findings because frequent and fairly frequent drinkers are likely to be responsible for a large percentage of youth motor vehicle accidents and deaths. Simulations suggest that, if reductions in youth alcohol use and abuse are desired, both a uniform drinking age of 21 and an increase in the Federal excise tax rate on beer are effective policies to accomplish this goal. They also suggest that the tax policy may be more potent than the drinking age policy.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 1852.

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Date of creation: Mar 1986
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Publication status: published as Coate, Douglas and Michael Grossman. "Effects of Alcoholic Beverage Pricesand Legal Drinking Ages on Youth Alcohol Use,". From Journal of Law and Economics, Vol. 31, No. 1012, pp. 145-171, (April 1988).
Handle: RePEc:nbr:nberwo:1852

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  1. Lewit, Eugene M & Coate, Douglas & Grossman, Michael, 1981. "The Effects of Government Regulation on Teenage Smoking," Journal of Law and Economics, University of Chicago Press, University of Chicago Press, vol. 24(3), pages 545-69, December.
  2. Ornstein, Stanley I & Hanssens, Dominique M, 1985. " Alcohol Control Laws and the Consumption of Distilled Spirits and Beer," Journal of Consumer Research, University of Chicago Press, University of Chicago Press, vol. 12(2), pages 200-213, September.
  3. 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, Chicago - Center for Study of Economy and State 41, Chicago - Center for Study of Economy and State.
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