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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.

Suggested Citation

  • Douglas Coate & Michael Grossman, 1986. "Effects of Alcoholic Beverage Prices and Legal Drinking Ages on Youth Alcohol Use," NBER Working Papers 1852, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:1852
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    1. Ornstein, Stanley I & Hanssens, Dominique M, 1985. " Alcohol Control Laws and the Consumption of Distilled Spirits and Beer," Journal of Consumer Research, Oxford University Press, vol. 12(2), pages 200-213, September.
    2. 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, vol. 24(3), pages 545-569, December.
    3. Becker, Gary S & Murphy, Kevin M, 1988. "A Theory of Rational Addiction," Journal of Political Economy, University of Chicago Press, vol. 96(4), pages 675-700, August.
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