Skip to main content

The effect of alcoholic beverage excise tax on alcohol-attributable injury mortalities

The European Journal of Health Economics volume 12, pages 103–113 (2011)Cite this article

Abstract

This study examines the effect of state excise taxes on different types of alcoholic beverages (spirits, wine, and beer) on alcohol-attributable injury mortalities—deaths caused by motor vehicle accidents, suicides, homicides, and falls—in the United States between 1995 and 2004, using state-level panel data. There is evidence that injury deaths attributable to alcohol respond differently to changes in state excise taxes on alcohol-specific beverages. This study examines the direct relationship between injury deaths and excise taxes without testing the degree of the association between excise taxes and alcohol consumption. The study finds that beer taxes are negatively related to motor vehicle accident mortality, while wine taxes are negatively associated with suicides and falls. The positive coefficient of the spirit taxes on falls implies a substitution effect between spirits and wine, suggesting that an increase in spirit tax will cause spirit buyers to purchase more wine. This study finds no evidence of a relationship between homicides and state excise taxes on alcohol. Thus, the study concludes that injury deaths attributable to alcohol respond differently to the excise taxes on different types of alcoholic beverages.

This is a preview of subscription content, access via your institution.

Access options

Buy single article

Instant access to the full article PDF.

USD 39.95

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Fig. 1a–d
Fig. 2a–d
Fig. 3a–d

Notes

  1. Under the age of 25, cause of death is more likely to involve a motor vehicle accident. The deaths of persons over ages of 65 are more likely to engage other factors unrelated to alcohol use. It is also worth noting that older people respond very little to price changes of alcoholic beverages. The net effect of alcohol consumption on mortality rates among older people is slim [9].

  2. Revision did not modify the classification used in this paper, and no adjustment was required.

  3. Taxes on sprits in percent are extremely high compared to those on wine as explained above.

  4. The homicide regression has the only positive coefficient for the cigarette tax with a P-value of 0.591.

  5. Let T be tax revenue, t be the tax rate, and X be consumption of beer; Then T = tX. Differentiating T with respect to t and noting that X = X(R), where R = P + t, and P is the price exclusive of tax, yields dT/dt = X + t(dX/dR)dR/dt. Assuming dR/dt = 1 since the supply curve of beer is infinitely elastic, yields dT/dt = X [1 + dx/dR)(R/X)(t/R)]. We can rewrite this as dT/dt = X [1 − (t/R)e], where e is the price elasticity of demand for beer [e = −(dX/dR)(R/X)]. As one can see, dT/dt > 0 if e < R/t. Since R/t > 1, T rises with t even if e > 1 as long as e is smaller than R/t.

References

  1. Adekoya, N., Moffett, D.B.: State-specific unintentional-injury deaths—United States, 1999–2004. MMWR Wkly 56(43), 1137–1140 (2007)

    Google Scholar 

  2. Alcohol Research & Health, Health Risks and Benefits of Alcohol Consumption. 24 (1), (2000)

  3. Caces, M.F., Elliott, S.D., Noble, J.A., Stinson, F.: Comparative alcohol-related mortality statistics in the United States by State, 1979–1985. Alcohol Health & Research World, Spring (1991)

  4. Caces, M.F., Harford, T.: Time series analysis of alcohol consumption and suicide mortality in the United States, 1934–1987. J. Stud. Alcohol 59(4), 455–461 (1998)

    Google Scholar 

  5. CDC: Surveillance, assessment of alcohol-related mortality–United States, 1980. MMWR 34(12), 161–163 (1980)

    Google Scholar 

  6. Chaloupka, F.J.: Effects of price on alcohol-related problems. Alcohol Health Res. World 17(1), 46–53 (1993)

    Google Scholar 

  7. Chaloupka, F.J., Grossman, M., Saffer, H.: The effect of price on alcohol consumption and alcohol-related problems. Alcohol Health Res. World 26(1), 22–43 (2002)

    Google Scholar 

  8. Chaloupka, F.J., Wechsler, H.: Binge drinking in college: the impact of price, availability, and alcohol control policies. Contemp. Econ. Policy 14(4), (1996)

  9. Cook, P.J., Ostermann, J., Sloan, F.A.: The net effect of an alcohol tax increase on death rates in middle age. Alcohol Taxation Control 95(2), 278–281 (2005)

    Google Scholar 

  10. Cook, P.J., Tauchen, G.: The effect of liquor taxes on heavy drinking. Bell J. Econ. 13(2), 379–390 (1982)

    Article  Google Scholar 

  11. Ellison, C.R.: Importance of pattern of alcohol consumption. Circulation 112, 3818–3819 (2005)

    Article  Google Scholar 

  12. Freeman, D.: Alternative panel estimates of alcohol demand, taxation, and the business cycle. South. Econ. J. 67(2), 325–344 (2000)

    Article  Google Scholar 

  13. Gmel, G., Rehm, J.: Harmful alcohol use. Alcohol Res. Health, 27(1), 52–62 (2003)

    Google Scholar 

  14. Greene, W.H.: Econometric analysis. Macmillan, New York (1993)

    Google Scholar 

  15. Grossman, M., Chaloupka, F.J., Becker, G.S., Murphy, K.M.: Alcohol addiction: an econometric analysis. Presented at the annual meeting of the American economic association, Anaheim, California (1993)

  16. Grossman, M., Chaloupka, F.J., Sirtalan, I.: An empirical analysis of alcohol addiction: results from monitoring the future panels. Econ. Inq. 36(1), 39–46 (1998)

    Article  Google Scholar 

  17. Grossman, M., Son, C.H.: Racial differences in effects of regulatory variables on alcohol-related mortality. In: Public policy and alcohol abuse among minorities. Final Report, Grant Number 5 R01 AA09435, National Institute on Alcohol Abuse and Alcoholism, US Department of Health and Human Services. University of Illinois at Chicago and National Bureau of Economic of Economic Research, Chicago and New York, February (2001)

  18. Gulliver, S., Kalman, D., Rohsenow, D., Colby, S.M., Eaton, C.A., Monti, P.M.: Smoking and drinking among alcoholics in treatment: cross-sectional and longitudinal relationships. J. Stud. Alcohol 61, 157–163 (2000)

    Google Scholar 

  19. Hammer, T.: Unemployment and use of drug and alcohol among young people: a longitudinal study in the general population. Br. J. Addict. 87, 1571–1581 (1992)

    Article  Google Scholar 

  20. Heien, D., Pompelli, G.: The demand for alcohol beverages: economic and demographic effects. South. Econ. J. 55(3), 759–770 (1989)

    Article  Google Scholar 

  21. Hingson, R.W., Howland, J.: Alcohol and non-traffic unintended injuries. Addiction 88, 877–883 (1993)

    Article  Google Scholar 

  22. Janlert, U., Hammarström, A.: Alcohol consumption among unemployed youths: results from a prospective study. Br. J. Addict. 87, 703–714 (1992)

    Article  Google Scholar 

  23. Klatsky, A.L., Armstrong, M.A., Kipp, H.: Correlates of alcoholic beverage preference: traits of persons who choose wine, liquor or beer. Br. J. Addict. 85, 1279–1289 (1990)

    Article  Google Scholar 

  24. Lee, A.J., Crombie, I.K., Smith, W.C.S., Tunstall-Pedoe, H.: Alcohol consumption and unemployment among men: the scottish heart health study. Br. J. Addict. 85, 1165–1170 (1990)

    Article  Google Scholar 

  25. Lindquist, C., Cockerham, W.C., Hwang, S.S.: Drinking patterns in the American deep south. J. Stud. Alcohol Drugs 60(5), 663–666 (1999)

    Google Scholar 

  26. Mann, R.E., Suurvali, H.M., Smart, R.G.: The relationship between alcohol use and mortality rates from injuries: a comparison of measures. Am. J. Drug Alcohol Abuse 27(4), 737–747 (2001)

    Article  Google Scholar 

  27. Marcotte, D.E.: The economics of suicide, revisited. South. Econ. J. 69(3), 628–643 (2003)

    Article  Google Scholar 

  28. Mast, B.D., Benson, B.L., Rasmussen, D.W.: Beer taxation and alcohol-related traffic fatalities. South. Econ. J. 66(2), 214–249 (1999)

    Article  Google Scholar 

  29. Midanik, L.T., Chaloupka, F.J., Saitz, R., Toomey, T.L.: Alcohol-attributable deaths and years of potential life lost—United States, 2001. Morb. Mortal. Wkly. Rep. 53(37), 866–870 (2004)

    Google Scholar 

  30. Mukamal, K.J., Maclure, M., Muller, J.E., Mittleman, M.A.: Binge drinking and mortality after acute myocardial infarction. Circulation 112, 3839–3845 (2005)

    Article  Google Scholar 

  31. Nelson, J.P.: Advertising bans, monopoly, and alcohol demand: testing for substitution effect using state panel data. Rev. Ind. Organ. 22(1), 1–25 (2003)

    Article  Google Scholar 

  32. Norström, T.: Effects on criminal violence of different beverage types and private and public drinking. Addiction 93(5), 689–699 (1998)

    Article  Google Scholar 

  33. Parker, R.N., Cartmill, R.S.: Alcohol and homicide in the United States 1934–1995–or one reason why U.S. rates of violence may be going down. Am. J. Drug Alcohol Abuse 88(4), 1369–1398 (1998)

    Google Scholar 

  34. Plugge, E., Fletcher, L., Stewart-Brown, S.: Risk of injury and the consumption of different types of beverage: is there an association? J. Epidemiol. Community Health 55(11), 789–790 (2001)

    Article  Google Scholar 

  35. Ponicki, W.R., Gruenewald, P.J.: The impact of alcohol taxation on liver cirrhosis mortality. J. Stud. Alcohol 67(6), 934–938 (2006)

    Google Scholar 

  36. Powell, K.E., Kresnow, M., Mercy, J.A., Potter, L.B.: Alcohol consumption and nearly lethal suicide attempts. Suicide Life Threat. Behav. 32, 30–41 (2001)

    Article  Google Scholar 

  37. Ravenholt, R.T.: Addiction mortality in the United States, 1980: tobacco, alcohol, and other substances. Popul. Dev. Rev. 10(4), 697–724 (1984)

    Article  Google Scholar 

  38. Saffer, H., Grossman, M.: Beer taxes, the legal drinking age, and youth motor vehicle fatalities. J. Legal Stud. 16(2), 351–374 (1987)

    Article  Google Scholar 

  39. Sher, L.: Alcohol consumption and suicide. Q. J. Med. 99, 57–61 (2005)

    Google Scholar 

  40. Sjögren, H., Valverius, P., Eriksson, A.: Gender differences in role of alcohol in fatal injury events. Eur. J. Pub. Health 6(3), 266–270 (2006)

    Article  Google Scholar 

  41. Sloan, F.A., Reilly, B.A., Schenzler, C.: Effects of prices, civil and criminal sanctions, and law enforcement on alcohol-related mortality. J. Stud. Alcohol 55(4), 454–465 (1994)

    Google Scholar 

  42. Smart, R.G.: Behavioral and social consequences related to the consumption of different beverage types. J. Stud. Alcohol 57, 77–84 (1996)

    Google Scholar 

  43. Smith, G.S., Branas, C.C., Miller, T.R.: Fatal nontraffic injuries involving alcohol: a metaanalysis. Ann. Emerg. Med. 33(6), 659–668 (1999)

    Google Scholar 

  44. Stockwell, T., Masters, L., Philips, M., Daly, A.: Consumption of different alcoholic beverages as predictors of local rates of night-time assault and acute alcohol-related morbidity. Aust. N. Z. J. Public Health 22(2), 237–242 (1998)

    Article  Google Scholar 

  45. Strandberg, T.E., Strandberg, A.Y., Salomaa, V.V., Pitkälä, K.: Alcoholic beverage preference, 29-year mortality, and quality of life in men in old age. J. Gerontol. 62A(2), 213–218 (2007)

    Google Scholar 

  46. Theobald, H., Johansson, S., Engfeldt, P.: Influence of different types of alcoholic beverages on self-reported health status. Alcohol Alcohol. 38(6), 583–588 (2003)

    Google Scholar 

  47. Thun, M.J., Peto, R., Lopez, A.D., Monaco, J.H., Henley, S.J.: Alcohol consumption and mortality among middle-aged and elderly U.S. adults. N. Engl. J. Med. 337(24), 1705–1714 (1997)

    Article  Google Scholar 

  48. U.S. Fire Administration/National Fire Data Center: Establishing a relationship between alcohol and casualties of fire. Top. Fire Res. Ser. 3(3) (2003)

  49. Weitzman, E.R., Folkman, A., Folkman, K.L., Wechsler, H.: The relationship of alcohol outlet density to heavy and frequent drinking and drinking-related problems among college students at eight Universities. Health Place 9(1), 1–6 (2003)

    Article  Google Scholar 

  50. Young, D.J., Bielinska-Kwapisz, A.: Alcohol consumption, beverage prices and measurement error. The National Institute on Alcohol Abuse and Alcoholism under grant number R03 AA13264, 2001 WEA International Conference (2001)

  51. Young, D.J., Bielinska-Kwapisz, A.: Alcohol taxes and beverage prices. National Tax J. 55(1), 57–73 (2002)

    Google Scholar 

Download references

Acknowledgment

We would like to thank Michael Grossman, Naci H. Mocan, and two anonymous referees for helpful comments.

Author information

Authors and Affiliations

  1. Department of Economics and Finance, Manhattan College, Riverdale, NY, 1047-4098, USA

    Chong Hwan Son & Kudret Topyan

  2. American University in Bulgaria, Blagoevgrad, Bulgaria

    Kudret Topyan

Authors
  1. Chong Hwan Son
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Kudret Topyan
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Kudret Topyan.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Son, C.H., Topyan, K. The effect of alcoholic beverage excise tax on alcohol-attributable injury mortalities. Eur J Health Econ 12, 103–113 (2011). https://doi.org/10.1007/s10198-010-0231-9

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10198-010-0231-9

Keywords

  • Alcohol tax
  • Excise tax
  • Injury death
  • Alcohol consumption
  • Homicide
  • Suicide
  • Falls

JEL Classifications

  • 118