The impacts of alcohol taxes: A replication review

TL;DR

This review confirms that increasing alcohol taxes generally reduces heavy drinking and mortality, with stronger evidence from well-designed natural experiments indicating significant public health benefits.

Contribution

It provides a replication and reanalysis of existing studies on alcohol taxes, highlighting the impact magnitude and emphasizing the importance of study design quality.

Findings

Alcohol taxes reduce heavy drinking and mortality.

Natural experiments provide more reliable impact estimates.

A 10% tax increase could save thousands of lives annually.

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 one--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.