Empirical Evidence on the Effects of Price on Alcohol
Use and Alcohol-Related Public Health Problems

Alcohol Price and Adolescent Drinking
 
The majority of studies on price and youth drinking conclude that higher alcoholic beverage prices significantly reduce the probability, frequency, and level of drinking among youth. (2)

• Higher beer prices reduce consumption by adolescents. (11, 5)
• Higher beer prices have a greater impact on heavy drinking youth than on other youth. (6, 8, 11, 14) Given that heavy drinking youth are those most likely to become adult alcoholics (1), higher beer prices may prevent alcoholism.

Price and Alcohol-Related Car Crashes and Deaths
 
Alcohol is involved in more than half of fatal motor vehicle crashes, which are the leading cause of death for persons under age 35. (25)

• Increasing beer taxes significantly reduce youth motor vehicle accident fatality rates. (22, 23)
• Increases in taxes on alcoholic beverages reduce drinking and driving in all segments of the population, with the greatest reduction among teens and young adults. (4, 14, 20)
• Specifically, a ten percent increase in the price of alcohol would result in, a 12.6 percent drop in drinking and driving among young men (13) and a 21.1% drop among young women. (13)
• Price and Alcohol-Related Disease
   
  Increasing the price of alcohol will also prevent disease and injury.
• Higher alcoholic beverage prices reduce rates of suicides, alcohol-related diseases, and deaths from drowning, accidental falls, and fires.  (25)
• Higher beer taxes lead to significant reductions in workplace injuries. (28)
• Higher alcohol prices reduce suicidal behavior among college students. (26)
• Increased taxes on alcoholic beverages result in significant reductions in gonorrhea and syphilis. (4)

Price and Alcohol-Related Violence

• Crime and violence rates are significantly reduced by higher beer taxes, especially for those under age 21. (21) A 10 percent increase in beer prices reduces, by about 4 percent, the number of students involved in violent behavior. (12)
• Higher beer taxes reduce rates of homicide (24) and rape and robbery. (7)
• An increase in beer taxes leads to reductions in child abuse. (17)
• Higher alcoholic beverage prices reduce the rate of severe domestic violence. (15)

Price and Academic Achievement

• A 10 percent increase in beer tax will raise the probability of high school graduation by about 3 percent. (28)
• Higher alcoholic beverage taxes will improve educational attainment of post-high school students. (6)
• Limiting alcoholic promotions and raising beer taxes is an effective way to reduce consumption and thereby increase grade point averages among college students. (27)
• Increases in alcohol prices will lead to improved educational outcomes for college students by reducing the likelihood of falling behind in school due to missed classes. (19)

For further information, please contact:           Anthony Biglan, Ph.D.
            Senior Scientist
            Oregon Research Institute
            tony@ori.org
 

References

1. Biglan, A., Brennan, P.A., Foster, S.L., Holder, H.D., Miller, T.L., Cunningham, P.B. et al. (2004). Helping adolescents at risk: Prevention of multiple problem behaviors. New York : Guilford .
2. Chaloupka, F., “The Effects of Price on Alcohol Use, Abuse, and Their Consequences,” in Reducing Underage Drinking: A Collective Responsibility, Bonnie, R., & O’Connell, M., eds., National Research Council and Institute of Medicine . Washington , DC : The National Academies Press, 2004.
3. Chaloupka, F.J., Saffer, H., and Grossman, M. (1993). Alcohol-control policies and motor vehicle fatalities. Journal of Legal Studies, 22(1), 161-186.
4. Chesson, H., Harrison, P., and Kassler, W.J. (2000). Sex under the influence: The effect of alcohol policy on sexually transmitted disease rates in the United States . Journal of Law and Economics, 43(1), 215-238.
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6. Cook, P.J., and Moore , M.J. (1993a). Drinking and schooling. Journal of Health Economics, 12, 411-429.
7. Cook, P.J., and Moore , M.J. (1993b). Economic perspectives on reducing alcohol-related violence. In S.E. Martin (Ed.), Alcohol and interpersonal violence: Fostering multidisciplinary perspectives (pp. 193-212). National Institute on Alcohol Abuse and Alcoholism Research Monograph No. 24, NIH Publication No. 93-3496. Rockville , MD : National Institute on Alcohol Abuse and Alcoholism.
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11. Grossman, M., Coate, D., and Arluck, G.M. (1987). Price sensitivity of alcoholic beverages in the United States . In M.H. Moore and D.R. Gerstein (Eds.), Control issues in alcohol abuse prevention: Strategies for states and communities (pp. 169-198). Greenwich , CT : JAI.
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18. Ohsfeldt, R.L, and Morrisey, M.A. (1997). Beer taxes, workers’ compensation and industrial injury. The Review of Economics and Statistics, 79(1), 155-160.
19. Powell, L.M., Williams, J., and Wechsler, H. (2002). Study habits and the level of alcohol use among college students. Impact Teen Research paper Series #19. Chicago : University of Illinois .
20. Ruhm, C.J. (1996). Alcohol policies and highway vehicle fatalities. Journal of Health Economics, 15(4), 435-454.
21. Saffer, H. (2001). Substance abuse control and crime: Evidence from the National Survey of Drug Abuse. In M. Grossman and C.R. Hsieh (Eds.), Economic analysis of substance use and abuse: The experience of developed countries and lessons for developing countries (pp. 291-307). Cheltenham , United Kingdom : Edward Elgar.
22. Saffer, H., and Grossman, M. (1987a). Beer taxes, the legal drinking age, and youth motor vehicle fatalities. Journal of Legal Studies, 16(2), 351-374.
23. Saffer, H., and Grossman, M. (1987b). Drinking age laws and highway mortality rates: Cause and effect. Economic Inquiry, 25(3), 403-417.
24. Sloan, F.A., Reilly, B.A., and Schenzler, C. (1994). Effects of prices, civil and criminal sanctions, and law enforcement on alcohol-related mortality. Journal of Studies on Alcohol, 55, 454-465.
25. U.S. Department of Health and Human Services. (2000). 10th special report to the U.S. Congress on alcohol and health. Washington, DC: Author.
26. Williams, J., Chaloupka, F.J., and Wechsler, H. (2002). Are there differential effects of price and policy on college students’ drinking intensity? ImpacTeen Research Paper No. 16, University of Illinois at Chicago . Unpublished.
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