Underage drinking and alcohol taxation

The Wall Street Journal reports that a National Academy panel is about to recommend higher excise taxes and marketing restrictions on alcohol to help control the problem of underage drinking. It’s been estimated, I don’t know how reliably, that underage drinkers account for an eighth of all the alcohol consumed in the country.

I haven’t seen the draft report, so I can’t comment on the quality of the reasoning. Higher taxes are obviously a good idea; as the old premium-Scotch ad used to say, “If the price is a problem to you, you’re drinking too much.” The current tax on a can of beer is about a dime, while the external costs, including crime, average at least a dollar, so there’s plenty of justification for raising the tax even if we ignore the damage drinking does to some drinkers.

Marketing restrictions probably won’t do much, if any, good. Much better to spend some of that new money on anti-drunkenness ads.

Naturally, the alcohol industry is upset. Naturally, they’ve got some tame members of Congress on their side: 134 of them issued a statement calling on the Academy not to adopt “new and untested theories.” (I guess that includes the Law of Demand, which asserts that higher prices lead to lower quantities consumed.)

Anheuser-Busch, which seems to be gunning for Whopper of the Week honors, says it “opposes excise-tax increases and believes the most effective way to discourage underage drinking is to encourage parents to communicate about this issue with their children.” For “most effective,” read “least effective”: Anheuser-Busch can’t really expect anyone to believe that it is seeking the most effective means of shrinking its own market.

Naturally too, the Bush Administration is in there fighting the bad fight, with an official at HHS trying to insist that the National Academy let the industry vet the report before it’s issued.

One move that would be guaranteed to increase teen drinking, at least in the short run, would in my view be a good idea just the same: eliminating the age restriction, which familiarizes millions of children each year with the joys of acquiring and using fraudulent identification documents. It also makes alcohol use a badge of adulthood, a point I had failed to notice until I saw a Miller Brewing billboard with the message “If you’re not twenty-one, it’s not Miller Time yet.”

Whatever the drinking age, booze will be available to people somewhat younger, either because they can pass for legal drinkers or because their slightly older friends can supply them. So making the legal age 21 rather than 18 reduces drinking by 16-year-olds, and thus reduces the number of kids learning to drink at the same time (in two different senses) that they’re learning to drive. But since no one really thinks that it’s a terrible thing if a 20-year-old has a drink, those laws are now so unenforceable as to be an embarrassment. Time to cut our losses, I say. Higher taxes ought to be a fair trade for the removal of an unenforceable restriction.

More, including some calculations, here

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com