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Raise Taxes, Lower Alcohol Consumption

Policymakers have experimented with of various ways of reducing excess alcohol consumption, but the most effective tool may be the simplest: Use targeted taxes to increase the price.
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A meta-analysis of 112 studies, just published in the journal Addiction, concludes "without a doubt that alcohol taxes and prices affect drinking," according to lead author Alexander Wagenaar, a professor of epidemiology and health policy research at the University of Florida College of Medicine. "When prices go down, people drink more, and when prices go up, people drink less."

This dynamic applies "to not only overall consumption, but also measures of heavy drinking," University of Chicago economist Frank Chaloupka notes in an accompanying commentary. "These findings provide a strong rationale for using increases in alcoholic beverage taxes to promote public health by reducing drinking."

The analysis, which examined studies from a variety of nations conducted over more than 30 years, finds the correlation between cost and consumption applies to all alcoholic beverages, although beer drinkers are less responsive to price changes than those who consume wine or hard liquor.

The report will provide ammunition for government officials, including California Gov. Arnold Schwarzenegger, who have proposed increases in alcohol taxes. Chaloupka notes that such taxes have not kept pace with inflation over the past few decades.

The reluctance on the part of legislators to raise the rates has contributed to "a sharp reduction in inflation-adjusted beer, wine and spirits prices," he writes. "These falling prices have led to more drinking than would have been the case had taxes and prices kept pace with inflation and, as a result, greater consequences from alcohol abuse."

His summary of those consequences is, well, sobering. The Centers for Disease Control and Prevention estimate that 79,000 Americans deaths are linked to excessive drinking each year. The economic cost of alcohol abuse in the U.S. is estimated at nearly $200 billion.

The report points to many examples of the positive effects of higher alcohol prices. Studies have found raising the cost of alcohol reduces violence, including spousal abuse, child abuse and suicide, as well as fatal traffic crashes and even teenage pregnancy.

On the other hand, a second newly released report suggests it might be unwise to price alcohol beyond the reach of seniors on fixed incomes. A report in the American Journal of Epidemiology finds that light to moderate drinking among seniors who are in good health reduces their odds of developing physical disabilities.

The report is based on three sets of data from the National Health and Nutrition Examination Survey's Epidemiological Follow-up Study. Over five years, 15 percent of the seniors surveyed developed a disability that impaired their ability to perform everyday tasks such as dressing or walking. Another 5 percent died during that time frame.

The researchers found that, among survivors, the risk of developing a disability was 12.5 percent for light-to-moderate drinkers, compared with 20 percent for those who abstained and 15.6 percent for those who drank heavily.

"If you start out in good health, alcohol consumption at light-to-moderate levels can be beneficial," said lead author Dr. Arun Karlamagla, an associate professor of medicine at the University of California, Los Angeles. "But if you don't start out healthy, alcohol will not give you a benefit."