I’ve just posted a review on the effects of alcohol taxes on alcohol consumption—and on the lives that alcohol abuse can cost. This literature review is unusual in the degree to which it replicates the studies it examines, so I have called it a “replication review.” Data, code, and spreadsheets are here.
The literature on this topic is large, and at first glance it seemed that the high-quality studies contradicted each other. Yet as I dug deeper, I found a pattern: the larger the experiment—the larger the price change—the clearer the effects. In the end, I believe the preponderance of the evidence says that higher prices do correlate with less drinking and lower incidence of problems such as cirrhosis deaths. And I see little reason to doubt the obvious explanation: higher prices cause less drinking. A rough rule of thumb is that each 1% increase in alcohol price reduces drinking by 0.5%. Extrapolating from some of the most powerful studies, I estimate an even larger impact on the death rate from alcohol-caused diseases: 1–3% within months. By extension, a 10% price increase would cut the death rate 9–25%. For the US in 2010, this represents 2,000–6,000 averted deaths/year.
Why I looked into the literature on alcohol taxation
Last November GiveWell convened a daylong meeting in Washington, DC, to gather and test ideas for priorities for our work relating to U.S. policy. (See the page about the event or Holden’s post.) One potential priority that came up—but which otherwise has hardly been mentioned on GiveWell.org—was increasing alcohol taxes:
We have no particular reason to believe that the time is particularly ripe for reform in this area, but with alcohol excise taxes gradually diminishing in real terms at both the state and federal levels, it’s possible to envision work at either level.
One example of a prospect to exploit the current political environment is a successful 2011 campaign to raise alcohol taxes in Maryland. The campaign was carried out by a coalition of public health and progressive advocacy groups around the combined goal of reducing excessive alcohol consumption and increasing revenue. Many of the coalition members had previously mobilized together to support the Affordable Care Act.
The next day, Holden asked me to look into what is known about the impacts of alcohol taxes.
Alcohol taxation is not a top priority for Open Phil at the moment. Though we see the issue as uncrowded (which is promising), we see it as having only moderate importance compared to other causes we’re considering, along with highly uncertain political tractability. Nevertheless, our priorities can and do shift, and the issue seemed worth understanding better, particularly in light of the large body of studies on the topic.
An excerpt from the intro:
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