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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

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.

Suggested Citation

  • Cook, Philip J. & Durrance, Christine Piette, 2013. "The virtuous tax: Lifesaving and crime-prevention effects of the 1991 federal alcohol-tax increase," Journal of Health Economics, Elsevier, vol. 32(1), pages 261-267.
  • Handle: RePEc:eee:jhecon:v:32:y:2013:i:1:p:261-267
    DOI: 10.1016/j.jhealeco.2012.11.003
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    References listed on IDEAS

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    1. Why law enforcement was powerless to stop Elliot Rodger from buying guns
      by David Cho in Wonkblog on 2014-05-30 01:09:15

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    Cited by:

    1. Nelson, Jon P. & McNall, Amy D., 2016. "Alcohol prices, taxes, and alcohol-related harms: A critical review of natural experiments in alcohol policy for nine countries," Health Policy, Elsevier, vol. 120(3), pages 264-272.
    2. 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.
    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.
    4. Mary F. Evans & Eric Helland & Jonathan Klick & Ashwin Patel, 2016. "The Developmental Effect Of State Alcohol Prohibitions At The Turn Of The Twentieth Century," Economic Inquiry, Western Economic Association International, vol. 54(2), pages 762-777, April.
    5. Resul Cesur & Alexander Chesney & Joseph J. Sabia, 2016. "Combat Exposure, Cigarette Consumption, And Substance Use," Economic Inquiry, Western Economic Association International, vol. 54(3), pages 1705-1726, July.
    6. 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).
    7. Jon P. Nelson & Amy D. McNall, 2017. "What happens to drinking when alcohol policy changes? A review of five natural experiments for alcohol taxes, prices, and availability," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 18(4), pages 417-434, May.
    8. Erik Nesson & Vinish Shrestha, 2016. "The Effects of False Identification Laws with a Scanner Provision on Underage Alcohol-Related Traffic Fatalities," Working Papers 2016-17, Towson University, Department of Economics, revised Oct 2016.
    9. Florian Baumann & Tim Friehe, 2014. "Regulating harmless activity to fight crime," Journal of Economics, Springer, vol. 113(1), pages 79-95, September.

    More about this item

    Keywords

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

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

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