Saturday, July 30, 2016

The Evidence Is Clear: Taxation Works Better Than Prohibition

I've said it before, and I'll say it again:  I believe that alcohol taxes should be raised significantly, and the drinking age lowered to 18.   The overwhelming weight of available evidence strongly suggests that alcohol taxes are far more effective, cost-effective, and socially efficient in reducing alcohol-related problems than the 21 drinking age can ever be.  And in the past few years we have even more evidence to show for it.

I have noted in the past that the landmark Miron and Tetelbaum study of 2009 has not only thoroughly debunked the idea that the 21 drinking age saves lives, but it also had a more subtle finding as well.  Namely, it also quietly confirmed the long-accepted finding that raising the beer tax actually does save lives, even if modestly.  And ironically, that was found when they tweaked the pro-21 Dee (1999) study that at first seemed to cast doubt on the beer tax--adding Alaska, Hawaii, and DC as well as more years to the model completely reversed Dee's original findings in that regard, as the original model apparently didn't have enough useful variation or statistical power to detect such results when state-specific trends were added to the regression.

Also, Ponicki et al. (2007) found that while there is supposedly a modest lifesaving effect of the 21 drinking age, high enough beer taxes can actually make that effect irrelevant as the two policies apparently act at cross-purposes.  When one is increased, the other becomes less relevant as a result, for obvious reasons.

Fast forward to newer studies on the effects of alcohol taxation and pricing.  Even pro-21 researcher Alexander Wagenaar appears to be a huge fan of raising alcohol taxes these days.  In 2009 and 2010, Wagenaar did two large meta-analyses on the effects of alcohol taxation on drinking as well as alcohol-related mortality and morbidity, respectively.  In both, the effects were clear:  it is quite effective indeed as a public health measure.  When alcohol taxes/prices go up, problems and deaths go down.  More recent studies also confirm such results as well.  No wonder Mark Kleiman famously said that, "Any sentence about drug policy that doesn't end with "raise alcohol taxes" is an incoherent sentence".

Thus, raising the alcohol taxes, even doubling or tripling them, should be a no-brainer.  So why aren't we doing it?   Clearly, the alcohol industry opposes any attempt to raise such taxes, and they always threaten a loss of jobs if they pass.  But there is really not much if any evidence that such a thing happens, and the industry consistently fails to produce any robust evidence in that regard.  As for the idea that alcohol taxes are regressive and hurt poorer folks and "responsible" drinkers, that is also not really true either:  the economic burden would fall mostly on heavier drinkers and wealthier folks, while moderate drinkers really wouldn't pay very much.  While I do not advocate extremely high taxes like they have in the Scandinavian countries, there is really no good reason not to raise and equalize all alcohol taxes back to at least the 1991 level for distilled spirits, adjust it for alcohol content, and index it for inflation from then on. Microbrewers, on the other hand, should be exempt from any tax hikes.

It is true that Thomas Jefferson said, "No nation is drunken where wine is cheap".  But that was then.  Nowadays, beer, wine, and even hard liquor have apparently become too cheap for our own good.  And far cheaper than back then or even a few decades ago, at least relative to most people's incomes.  Yet the social costs of excessive drinking have not gone down much, so there is a problem of increasing "externalities".  And unlike most policy measures, raising alcohol taxes would also raise revenue rather than cost it, and there would be no loss of individual rights either.  Clearly, it's a win-win-win situation for everyone except the heaviest drinkers and the merchants of death that profit from them (along with funeral directors, of course). 

For once, MADD is correct about something:  if it saves even one life, it's worth it.  I guess even a stopped clock is right twice a day.

1 comment:

  1. Raising the tax of proof per gallon on alcoholic beverages would encourage more alcohol responsibility.