The Impacts of Alcohol Taxes: A Replication Review

Abstract

This paper reviews the research on the impacts of alcohol taxation outcomes such as heavy drinking and mortality. Where data availability permits, reviewed studies are replicated and reanalyzed. Despite weaknesses in the majority of studies, and despite seeming disagreements among the more credible ones — ones based on natural experiments — we can be reasonably confident that taxing alcohol reduces drinking in general and problem drinking in particular. The larger and cleaner the underlying natural experiment, the more apt a study is to detect impacts on drinking. Estimates from the highest-powered study settings, such as in Alaska in 2002 and Finland in 2004, suggest an elasticity of mortality with respect to price of −1 to −3. A 10% price increase in the US would, according to this estimate, save 2,000−6,000 lives and 48,000−130,000 years of life each year.