Publications [#14348] of Philip J. Cook

We've launched a new site so please go to People & Research for current information on our faculty and staff.

Journal Articles

  1. PJ Cook and MJ Moore. "The Economics of Alcohol Abuse and Alcohol-Control Policies." Health Affairs 21.2 (March/April 2002): 120-133.
    (last updated on 2006/11/17)

    Abstract:
    Economic research has contributed to the evaluation of alcohol policy through empirical analysis of the effects of alcohol-control measures on alcohol consumption and its consequences. It has also provided an accounting framework for defining and comparing costs and benefits of alcohol consumption and related policy interventions, including excise taxes. The most important finding from the economics literature is that consumers tend to drink less ethanol, and have fewer alcohol-related problems, when alcoholic beverage prices are increased or alcohol availability is restricted. That set of findings is relevant for policy purposes because alcohol abuse imposes large "external" costs on others. Important challenges remain, including developing a better understanding of the effects of drinking on labor-market productivity.

    The production and sale of alcoholic beverages account for a small share of national product in the United States and in other advanced economies. However, the deleterious effects of alcohol consumption on health and safety constitute a substantial economic burden, reducing our overall standard of living. Chronic heavy drinking causes organ damage that results in disability and early death. Other possible consequences include cognitive impairment, addiction, reduced productivity, neglect of family responsibilities, and birth defects. The acute effects of alcohol abuse are still more costly: traumatic injury and property damage from accidents, criminal victimization, domestic violence, unwanted sexual encounters and venereal diseases, and hangover. In sum, alcohol is not just another commodity. Around the world, historically and currently, public concern about the consequences of excess alcohol consumption for individual health and community wellbeing has been incorporated in cultural norms, which are often reinforced by private rules and government regulation.

    The nature and extent of government involvement in the alcohol market has varied widely over time and place, reaching a logical extreme in the United States with Prohibition in the 1920s. Every state now has a wide array of alcohol-control measures in place, including a minimum age of purchase (twenty-one), excise taxes, a licensing system for retail outlets, and penalties for driving under alcohol's influence. While alcohol control is not so contentious as when the temperance movement was in full flower, the relevant policies continue to be debated and are subject to change.

    To some extent, the debate over appropriate policy is concerned with factual issues. That is the arena in which economists have made their primary contribution. Economic research on the effects of alcohol-control measures on consumption and its consequences has helped to establish that such measures can be effective in reducing alcohol abuse and improving public health. But the debate is also concerned with values "of how best to balance the conflicts between individual liberty and community well-being. Economists have contributed to this discussion through application of cost-benefit analysis to the evaluation of alcohol-control measures and treatment. Economists' normative framework is distinguished in part by its incorporation of the consumer-sovereignty principle, acknowledging the pleasures of drinking as well as the pains.

    This paper provides a brief summary of the economics literature on drinking and its consequences, with a focus on the effects of alcohol-control measures. We conclude by suggesting that higher tax rates on alcoholic beverages would be in the public interest and noting the importance of further research on drinking and productivity.

Philip J. Cook