This is a writeup of a shallow investigation, a brief look at an area that we use to decide how to prioritize further research.
In a nutshell
What is the problem?
The Centers for Disease Control and Prevention reports that excessive drinking causes tens of thousands of deaths and costs society hundreds of billions of dollars every year in the United States.
What are possible interventions?
We focus on alcohol excise taxes in this investigation. The evidence suggests that alcohol consumption is sensitive to price changes, and so alcohol excise taxes are likely to decrease consumption and related social costs. In general, the value of taxes on alcohol has eroded in the past few decades. However, some state-wide campaigns to raise alcohol taxes have been successful in recent years. A funder could support a variety of research or advocacy efforts at the state or federal level to encourage alcohol tax increases.
Who else is working on it?
A number of organizations support work related to alcohol abuse prevention and treatment, but our understanding is that few focus on alcohol tax policy, and we are not aware of any major active funders in the area. Some research is being conducted by the US government and other institutions.
1. What is the problem?
Excessive drinking has been linked to significant costs to society, including increased liver disease, reckless driving, lost productivity, unsafe sex and STIs, and violent crime.1 Although the exact social cost is uncertain, the Centers for Disease Control and Prevention (CDC) reports that alcohol causes around 88,000 deaths (10% of all deaths among working-age adults) and costs the economy around $224 billion per year in the US.2
Binge drinking (defined as having four or more drinks in one session for women, and five or more for men) is by far the most common and socially harmful form of excessive alcohol consumption in the US.3 However, only a small fraction of binge-drinkers would be classified as “alcohol dependent.”4 Interventions that target binge-drinkers, not just people who suffer from alcohol dependence, may help substantially reduce social harms from excessive drinking.
2. What are possible interventions?
We began investigating alcohol tax policy after hearing from Mark Kleiman and Phil Cook that they found the research on the impact of alcohol taxes promising.5 In particular, Kleiman claimed that increasing alcohol taxes is likely one of the most effective ways to reduce crime.6
We have focused primarily on alcohol tax policy, which we see as having several advantages as an approach to reducing excessive drinking:
- We start with an assumption that raising prices will reduce consumption.
- The taxes would be relatively easy to implement and enforce, and governments are incentivized to enforce the law in order to collect revenue. 7
- There has been extensive research on the effects of alcohol excise taxes on harms from alcohol, which we discuss below.
We are aware of other potential interventions, but have not investigated them. These include:
- Supporting the implementation of social host ordinances. These ordinances render adults criminally and/or financially liable for underage drinking on their property.8
- Further restricting when and where individuals are able to purchase alcohol.9
- Imposing marketing restrictions on alcohol companies, especially for marketing aimed at young people.10
- Increasing the price of alcohol by restricting “happy hours” and other discounts.11
- “Swift and certain” sanctions (mild but almost immediate punishment for alcohol abuse) for people on probation for alcohol-related crimes.12
- Stricter enforcement of current laws and regulations, such as the minimum drinking age and driving under the influence laws.13
- Supporting litigation campaigns against alcohol companies.14
2.1 Alcohol Taxation
The tax rate of alcohol in inflation-adjusted terms has decayed significantly in recent years.15 Federal alcohol taxes have not been raised since 1991, and many states have kept alcohol taxes level for decades.16 The experts we spoke with suggested that increasing alcohol taxes can reduce consumption and bring alcohol’s private costs more in line with its social costs.17 Heavy drinkers would bear most of the cost of the tax, and contribute most to raising revenue.18
The Open Philanthropy Project commissioned David Roodman to conduct a replication review of the existing literature to assess the evidence about the likely humanitarian impacts of raising alcohol taxes. He summarizes the large existing literature and estimates that a 10% increase in the price of alcohol would lead to roughly a 5% reduction in the amount of alcohol consumed.19 The best evidence also seems to indicate that higher alcohol prices cause a substantial decrease in alcohol-caused death (particularly due to cirrhosis).20 We have less information about possible tax-induced reductions in violence and traffic deaths.21 Overall, Roodman’s review estimates that a 10% tax-induced price hike in the US would reduce the number of alcohol-caused deaths by 9-25%, which would amount to 2,000-6,000 fewer deaths per year.22 Using the more expansive CDC definition of alcohol-caused deaths and assuming that alcohol tax increases would have the same proportional effect on them, a 10% price increase would lead to 8,000-22,000 fewer deaths per year in the U.S.23 However, our impression is that a 10% increase in prices is significantly larger than recent state alcohol tax increases, which have raised prices by more like 3%.24
2.2 What has the track record of past advocacy efforts been?
David Jernigan reports that reform advocates attempt to increase alcohol taxes in 20-30 states per year, of which the vast majority fail.25
At least two states (Illinois and Maryland) have recently raised alcohol taxes, and the Maryland increase included a public health (not just a revenue-raising) rationale; it combined a public health message with a coalition of 1,200 groups and won a sales tax increase of three percent, or roughly five cents per drink, which amounted to a $75 million annual increase in state revenues.26 We do not know how feasible it would be to replicate the Maryland tax increase in other states.
A consideration in favor of state (rather than federal) campaigns is the possibility that the success of several campaigns could create enough momentum to prompt changes in other states or at the federal level. A similar process occurred after several states first altered their tobacco tax policies in response to an increased understanding of the dangers of smoking.27
3. Who else is working on this?
Our understanding is that alcohol policy research and advocacy has experienced a decline in private funding and there is little support for alcohol policy reform from large foundations today.28
A number of organizations, such as Mothers Against Drunk Driving, work on alcohol policy.29 These organizations represent a strong alcohol abuse prevention and treatment community. However, our impression is that most concentrate their efforts on scientific research, alcohol addiction, abuse treatment, and decreasing drunk driving, rather than optimal alcohol tax policy.30
We are aware of only a couple small exceptions:
- The Center on Alcohol Marketing and Youth (CAMY) offers research and advocacy training relating to alcohol tax policy increases.31
- The CDC funds a few million dollars’ worth of research and advocacy on alcohol policy each year, including supporting CAMY’s work on alcohol tax policy.32
4. Questions for further investigation
Our investigation in this area has been limited, and many important questions remain unanswered by our investigation.
Amongst other topics, our further research on this cause area might address:
- How would additional funding translate into additional advocacy efforts and to what extent is funding the bottleneck to advocacy success on alcohol tax issues?
- How should we think about the “momentum” dynamics at the state and federal level?33
- What are the possible negative social and economic consequences of alcohol tax increases?
- What other interventions might cost-effectively reduce the harms from alcohol?
- Do people displace alcohol consumption with the consumption of other drugs when alcohol taxes rise?
5. Our process
We initially decided to investigate this issue because Mark Kleiman, one of our criminal justice reform grantees, told us that excessive alcohol consumption was the most important public policy issue he knew of with no major advocate.34 While Kleiman was primarily focused on the impact of alcohol on crime, the bulk of our research has been on the public health aspects of alcohol consumption.
We’ve spoken to roughly half a dozen individuals in our exploration of this issue to date. Public notes are available from our conversations with:
- Phil Cook, ITT/Sanford Professor of Public Policy and Professor of Economics and Sociology, Duke University
- David Jernigan, Director, Center on Alcohol Marketing and Youth (CAMY) and Associate Professor, Johns Hopkins University Bloomberg School of Public Health
- James Mosher, President, Alcohol Policy Consultations; Adjunct Professor, Johns Hopkins University’s Bloomberg School of Public Health; Senior Policy Advisor, The CDM Group, Inc.
- Mark Kleiman, Professor of Public Policy, UCLA School of Public Affairs
- Centers for Disease Control’s Excessive Alcohol Use Prevention Team (Alcohol Program)
We also commissioned David Roodman to conduct a replication review for the Open Philanthropy Project on the impacts of alcohol taxes on consumption and health outcomes.
6. Sources
DOCUMENT | SOURCE |
---|---|
Roodman 2015 | Source |
Our non-verbatim summary of a conversation with David Jernigan, August 6, 2014 | Source |
Our non-verbatim summary of a conversation with James Mosher, August 12, 2014 | Source |
Our non-verbatim summary of a conversation with Mark Kleiman, July 2, 2013 | Source |
Our non-verbatim summary of a conversation with Phil Cook, July 29, 2014 | Source |
Our non-verbatim summary of a conversation with the CDC’s Alcohol Program, September 5, 2014 | Source |
Stahre et al. 2014 | Source |