With alcohol, cost rules

The biggest alcohol deterrent? Price

A bar in a college town during “happy hour” is a perfect laboratory to gauge the effect of price on alcohol consumption. Cash-strapped young adults jam these establishments where binge drinking is acceptable, even encouraged.

University of Florida researchers analyzed more than 100 studies spanning four decades on price elasticity of alcohol. The results were consistent: When prices go down, people drink more. When they go up, people drink less.

In fact, price decreases alcohol consumption more effectively than law enforcement, media campaigns and school health classes. And price is most efficiently manipulated by taxes.

Doubling alcohol taxes would reduce alcohol-related deaths by more than one-third, traffic accidents by 11 percent and sexually transmitted disease by 6 percent, according to one study. For example, a fifth of gin in New York State had a tax of $.55 in 2010. It also estimated that a 10 percent increase in retail price would reduce drinking by 5 percent.

But alcohol prices are going in the other direction. Federal and state alcohol taxes have declined significantly since the 1950s when adjusted for inflation, as has the overall price of alcohol. That is likely a result of high profit margins on alcohol and the industry’s powerful lobbying presence in state capitals and Washington.

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