Alcohol Prices and Binge Drinking: Connected?

Are alcohol prices and binge drinking linked? Could raising the price of alcohol reduce binge drinking?

alcohol prices and binge drinking

Heavy episodic drinking is often called binge drinking. It is a serious health risk. Especially among young people. How can binge drinking be reduced?

Proposals

A variety of approaches are promoted.

  • More law enforcement.
  • Higher alcohol prices.
  • More alcohol education.
  • More law enforcement.
  • Higher server liability.
  • More severe penalties.
  • Bigger warning labels on alcohol containers.
  • More restrictions on the  number of retail sales outlets.
  • Imposing  prohibition. (Almost one of every five Americans supports prohibition)
  • More restrictions on alcohol advertising.

Forcing higher alcohol prices has many supporters. They think it would be good  public health policy.

Are Alcohol Prices and Binge Drinking Related?

Are alcohol prices and binge drinking related? A review of research on the subject was made. Fifty-six econometric studies were found. Five natural experiments of tax reductions and six field studies were also found.

alcohol prices and binge drinking: connected?The outcomes examined included the incidence, the intensity, and the  frequency of binge drinking.

In over half the studies there were either no relationships or mixed relationships.

Evidence

The overall evidence shows that the behavior of binge drinkers is not highly-responsive to increased prices. This finding held for both men and women. It also held  across different age groups.

The author concluded that increasing the prices of alcoholic beverages, by taxes or otherwise, would probably not be an effective way to reduce the incidence or severity of binge drinking. This would be true regardless of gender or age.

Source

Nelson, J. Binge drinking and alcohol prices: a systematic review of age-related results from econometric studies, natural experiments and field studies. Health Econ Rev, 2015, 5, e6.

Readings

  • Kenkel, D.S. New estimates of the optimal tax on alcohol. Econ Inq. 1996, 34(2), 296-319.
  • Lau, H.H. Cost of Alcoholic Beverages as a Determinant of Alcohol Consumption. In: Gibbins, R. J., et al. (eds.) Research Advances in Alcohol and Drug Problems, Vol. 2. NY: Wiley, 1975. Pp. 211-245.
  • Manning, W.G., et al. The demand for alcohol: The differential response to price. J Hlth Econ. 1995, 14(2), 123-148.
  • Nelson, J.P. Meta-analysis of alcohol price and income elasticities. Hlth Econ Rev. 2013, 3, 17.
  • Ornstein, S.I., and Levy, D. Price and income elasticities of demand for alcoholic beverages. Rec Adv Alco. 1983, 1, 303-345.
  • Ruhm, C.J., et al. What U.S. Data Should be Used to Measure the Price Elasticity of Demand for Alcohol? Working Paper No 17578. Washington, DC: NBER, 2011.