About 15% of the entire national health care budget is spent on treating conditions related to substance abuse, including alcohol. Lost productivity, accidents, injuries, illnesses, property damage, violence and higher utilization of health, social and criminal justice systems contribute to this significant financial burden. These figures does not include the inestimable cost of human suffering… shattered families, unmet potentials and premature deaths.
Summary of Main Findings
For one, regular drinking can turn into a dependency, or what some people describe as functional alcoholism, giving individuals the belief that they’re in control even when they aren’t. At the same time, it’s estimated that less than 10 percent of those with alcoholism receive professional treatment. 4The beer tax has been used as an example, because beer is the most widely consumed alcoholic beverage in the United States and nearly all States apply specific taxes to beer. It can be detrimental to your relationships with friends, family members, coworkers and anyone else you meet as you go through your daily life. As alcohol abuse progresses, you may begin to withdraw from society or get easily upset at acquaintances if the amount or frequency of your use is brought up.
Associated Data
The studies addressing this issue consistently found that in fact in the U.S. market of alcoholic beverages, an overshifting of excise taxes occurs, meaning that prices for alcoholic beverages have risen by more than the amount of the tax increases (Cook 1981; Kenkel 2005; Young and Bielinska-Kwapisz 2002). The rates by which tax how to identify liberty caps increases can be passed on to final retail prices (known as the pass-through rates) range from 1.2 to 4.2, depending on specific brands and types of alcoholic beverages analyzed as well as on sales location (i.e., on premises versus off premises). Thus, the limited empirical evidence indicates that increases in alcoholic-beverage excise taxes likely would lead to even larger increases in prices. On the other hand, the relative stability of the nominal, specific excises currently levied in the United States has contributed substantially to reductions in the real prices of alcoholic beverages. In total, 12 models were performed for (1) two different cost indicators as dependent variables; (2) two different alcohol indicators as independent variables; and (3) for total direct and indirect costs.
- To do so, we first looked at City-Data for the number of drinks each city’s inhabitants drink in a week on average.
- Most recent research, however, consistently has documented an inverse association between prices (i.e., beer taxes) and traffic fatalities (Elder et al. 2010; Makela and Osterberg 2009; McCarthy 2003; Ponicki et al. 2007; Wagenaar et al. 2010; Young and Bielinska-Kwapisz 2006).
- We used each state’s average life expectancy to find the years of drinking (age 21 and over), then compared this with each city’s weekly drinking habits and cost of alcoholic drinks.
- Most studies in this field have used fatal or nonfatal motor-vehicle crashes as a proxy for drinking and driving, because alcohol frequently is involved in these crashes.
A large and growing literature has explored the impact of prices of alcoholic beverages on alcohol use and abuse as well as related adverse consequences. The vast majority of these studies provide strong evidence supporting efforts to raise Federal or State taxes to promote public health by reducing drinking, including abusive drinking and its consequences. More importantly, these studies clearly indicate that adolescents and youth are more responsive to changes in prices than the general population, implying that the implementation of tax policies not only could produce immediate public health benefits but achieve even greater success in the long run. From a public finance perspective, raising alcohol taxes also is among the most cost-effective instruments to reduce harm and promote public health (Anderson et al. 2009). Some of these studies specifically have focused on high-risk populations, such as adolescents and young adults. To date, evidence such as the findings presented here has had little impact on public policy, with the Federal Government and most State governments allowing the inflation-adjusted value of their alcoholic beverage taxes to fall as demonstrated by the infrequent and modest increases in these taxes.
Other Policies Affecting Alcoholic-Beverage Prices
However, the States’ ability to defend themselves against such legal challenges has been hampered by limited published evidence on the effects of these policies on alcohol prices, consumption, and related consequences of drinking. In contrast to previous reviews on the economic burden of alcohol use, we provide several novel insights. Any study seeking to estimate the economic burden from alcohol use will be informed by previous work, with a focus on studies that were conducted in the same location using similar data sources. For example, if governments mandate researchers to update previous estimates (see, for example, the paper by the Scottish Government [35]), changes to the estimation method ought to be kept to a minimum in order to allow for comparison of costs over time. Thus, such circumstances could explain why the same methodological approaches are maintained, even if they are incomplete, while guideline recommendations are not considered.
All authors have completed the International Committee of Medical Journal Editors (ICMJE) uniform disclosure form at /coi_disclosure.pdf, and declare no support from any organization for the submitted work. The authors have no other relationships or activities that could appear to have influenced the submitted work. If you’re regularly abusing alcohol, this may happen more often than you’d like, causing you to miss work to recover or underperform while on the job. Over time, your paid time off (PTO) for sick days or vacation may run out and you’ll have to go without pay any time you stay home from a hangover.
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This variable represents the percentage change in the consumption of alcoholic beverages that occurs when the price increases by 1 percent, holding other factors constant. Thus, a price elasticity of the demand of, for example, what are whippets drugs −0.3 indicates that a 1 percent increase in price results in a 0.3 percent decrease in consumption. We corroborate previous estimates, indicating that health care spendings only make up a fraction of total costs (13% in the 2009 review; 18% in our study), while productivity losses are the main cost driver (72% in the 2009 review; 61% in our study). Furthermore, our results, based on a larger number of studies from more recent years, are in line with total costs estimates of a 2009 review, according to which alcohol-attributable economic costs amounted to 2.5% and 2.1% of the GDP in high- and middle-income countries, respectively [8, 41].
Thus, studies that do not separate alcohol-related fatal crashes from non–alcohol-related crashes may come to different conclusions than studies that do make this distinction (Elder et al. 2010; Fell et al. 2009; Miron et al. 2008). The impact of such measures seems to be larger in the long run than in the short run and tends to be particularly strong for adolescents and young adults (e.g., Cook and Moore 2001; Elder et al. 2010; Gallet 2007; Grossman et al. 1998; Kuo et al. 2003a, b; Laixuthai and Chaloupka 1993). These conclusions have important policy implications and suggest that raising prices of alcoholic beverages not only postpones drinking initiation and addiction formation among adolescents and young adults but also reduces heavy or chronic alcohol use among adults.
Excise-tax policies vary widely across States, with some States imposing taxes on prices (i.e., ad valorem taxes) and others levying excises on quantity or volume (i.e., specific taxes). All States impose a tax on beer; in addition, all license States also impose taxes on wine and spirits.3 In general, these State excise taxes are highest for distilled spirits. State excise taxes, for the most part, have followed the same patterns as Federal taxes, with only infrequent and modest increases that have resulted in substantial declines over time in the real values of these taxes. The degree to which the real value of the State taxes has dropped depends on the inflation rate and the latest tax rates imposed by a given State. More than 20 States have not raised their beer taxes for at least 20 years, and only about 10 States have raised them in the last decade.4 In some extreme cases, the deflated tax rates per drink have even declined to close to zero. For example, the nominal State beer excise tax in Wyoming was 2 cents per gallon in 2009, and it had been set since 1963.
In contrast, the Federal Government and many State governments have how to flush alcohol out of your system for a urine test adopted several large increases in taxes on cigarettes and other tobacco products, at least in part to promote public health by reducing tobacco use. Similarly, indexing alcohol excise taxes to inflation in order to prevent substantial reductions in real tax rates would help ensure that higher taxes have a sustained impact on drinking and its consequences. As the studies presented in this review demonstrate, sizable increases in alcoholic beverage taxes can be a highly effective option for reducing the health, economic, and social consequences of alcohol use and abuse.
Most subsequent studies confirmed this finding (Cook and Moore 2001; Laixuthai and Chaloupka 1993; Young and Bielinska-Kwapisz 2006). Moreover, Laixuthai and Chaloupka (1993) reported that younger adolescent drinkers were more price sensitive than older adolescent drinkers, which is a particularly important finding because Cook and Moore (2001) provided evidence supporting the notion that drinking habits are formed at young ages. For example, Mast and colleagues (1999) replicated the analysis by Chaloupka and colleagues (1993) but used data obtained from 1984 to 1992, rather than from 1982 to 1988.
Estimates indicate that from 1951 to 2009, the average real State beer tax has fallen from almost 42 cents per gallon to just over 11 cents per gallon (see figure 2) (Beer Institute 2009). For the two cost indicators (Int$ per adult; % GDP) and separately for the total costs, and the direct and indirect costs, weighted means were calculated to estimate average costs across all studies. The variation around point estimates is given by 95% confidence intervals (CIs) based on the standard error. Cluster effects were assessed through intraclass correlation coefficients (ICC) of random intercept regression models using the R packages lmer [18] and performance [19].
In addition to how much is typically spent, we also wanted to see how much people could save by altering their drinking habits. Annually, people in these cities could save anywhere from $268 to $507 just by decreasing their alcohol use by 25%. Going out for drinks is part of many people’s social lives, young and old, but it can potentially develop into a costly problem in multiple ways.