Reasonable policy tries instead to focus on the relevant margins. An alcohol excise tax sufficient to internalise the external harms imposed by heavy drinkers will impose very strong penalty on moderate drinkers. Instead, policy should combine a rather lower excise component with penalties attached directly to the actions that impose external harms: penalties for being drunk and disorderly; penalties for driving while intoxicated; making alcohol use an aggravating factor in sentencing for other crimes.
A new bit of evidence that prices are a blunt instrument in dealing with harms imposed by heavy drinkers. I've typically cited Wagenaar's metastudy showing that heavy drinkers are roughly 60% as price responsive as moderate drinkers: a 10% price increase has drinkers in total reduce consumption by 4.4% but has heavy drinkers reduce consumption only by 2.8%. The University of Maryland's Jon Nelson has a new study out focusing on a smaller proportion of the population of estimates, but the ones with the finer-grained individual data that allows for demographic breakdowns. The abstract summarises things:
Gender differences in drinking patterns are potentially important for public policies, especially policies that rely extensively on higher alcohol taxes and prices. This paper presents a systematic review of alcohol prices and gender differences in drinking and heavy drinking by adults and young adults. Starting with a database of 578 studies of alcohol demand and other outcomes, 15 studies are reviewed of adult drinking including discussion of samples, measurement issues, econometric models, special variables, and key empirical results. A similar discussion is presented for eight studies of drinking by young adults, ages 18–26 years. Four conclusions are obtained from the review. First, adult men have less elastic demands compared with women. Second, there is little or no price response by heavy-drinking adults, regardless of gender. Third, although the sample is small, price might be important for drinking participation by young adults. Fourth, the results strongly suggest that heavy drinking by young adults, regardless of gender, is not easily dissuaded by higher prices. Policy implications, primary study limitations, and suggestions for future research are discussed.Nelson here provides more of a literature review than a metastudy that would provide a new summary elasticity measure. A couple other interesting findings:
- Bans on alcohol on university campuses do rather more to deter moderate drinking than to stop heavy drinking;
- The number of licenced outlets near campus has little effect on drinking or on heavy drinking among young adults.