Alcohol Pricing

A number of public health and economic studies have concluded that alcohol availability is related to high-risk and illegal drinking and associated negative consequences.

The theory is that increased alcohol availability leads to increased adverse consequences. Therefore, strategies that limit availability, such as enforcing the minimum legal drinking age, imposing restrictions on where and when alcohol can be served or sold, and increasing the price of alcoholic beverages, should lead to reductions in negative consequences (e.g., impaired driving, alcohol-related interpersonal violence, vandalism, and low grades due to heavy drinking).

Alcohol is a price-sensitive product, especially for young people. That means that increasing the cost of alcohol can be an effective strategy to consider as part of a comprehensive approach to reducing alcohol-related problems on campuses and in surrounding communities.

Some tools for increasing alcohol prices are:

  • Eliminating low-price drink specials and happy hours
  • Imposing local fees on alcohol retailers to support increased liquor law enforcement
  • Indexing state and federal alcohol excise tax rates to account for inflation over time

Data Support Increasing Alcohol Price to Limit Availability

Recent research supports increasing alcohol prices as a way to decrease availability. A new study by researchers at the University of Florida analyzed more than 100 studies conducted over 40 years on the tax/price relationship to alcohol consumption. Data from the study, “Effects of Beverage Alcohol Price and Tax Levels on Drinking: A Meta-analysis of 1003 Estimates from 112 Studies,” published in the journal Addiction (Feb. 2009) by Alex Wagenaar and colleagues, show alcohol prices and taxes are inversely related to drinking – the higher the price of alcohol, the less people drink.

This extensive review of the literature also showed that the preventative effects of increasing the cost of alcohol are large compared to other alcohol prevention policies and programs. The authors conclude that public policies that raise prices of alcohol are an effective means to reduce drinking.

Raising alcohol excise taxes is one way to increase the price of alcoholic beverages. Taxes on alcohol have not kept up with inflation, and increases are long-overdue in many states. Monies gained through higher excise taxes not only limit availability, but also give states revenue to fight the harmful effects of alcohol abuse.

According to Phillip J. Cook, professor of public health policy and economics at Duke University and author of Paying the Tab: The Costs and Benefits of Alcohol Control, alcohol taxes unequivocally promote public health and safety. In the Spring 2008 Special Issue of Prevention File, Cook states that, “of all the alcohol control measures, taxes have unique advantages. They help curtail alcohol abuse and its consequences without a direct restriction on freedom of choice. They can be set high or low or anywhere in between, providing the possibility of a calibrated response to the costs of alcohol related problems. And, rather than competing for resources with other governmental priorities, alcohol taxes enhance public revenues.”

Effective Prevention

Limiting the availability of alcohol to students is an effective component of an environmental management approach to prevention at colleges and universities. There are steps campuses can take with community and state-level partners to increase the price of alcohol as a means of limiting availability. Locally, campus prevention professionals and administrators can work with bar and tavern owners to eliminate low-price drink specials. At the state level, campus and community coalitions can work together to advocate for increased alcohol taxes and prices.

The following resources provide information for further discussion on alcohol pricing and taxation:

Literature:

Additional Resources:

View Previous Hot Topics