The Relationship Between Alcohol Taxes and Binge Drinking: Evaluating New Tax Measures Incorporating Multiple Tax and Beverage Types

Addiction. 2015 Mar;110(3):441-50. doi: 10.1111/add.12818. Epub 2014 Dec 28.

Abstract

Aims: U.S. studies contribute heavily to the literature about the tax elasticity of demand for alcohol, and most U.S. studies have relied upon specific excise (volume-based) taxes for beer as a proxy for alcohol taxes. The purpose of this paper was to compare this conventional alcohol tax measure with more comprehensive tax measures (incorporating multiple tax and beverage types) in analyses of the relationship between alcohol taxes and adult binge drinking prevalence in U.S. states.

Design: Data on U.S. state excise, ad valorem and sales taxes from 2001 to 2010 were obtained from the Alcohol Policy Information System and other sources. For 510 state-year strata, we developed a series of weighted tax-per-drink measures that incorporated various combinations of tax and beverage types, and related these measures to state-level adult binge drinking prevalence data from the Behavioral Risk Factor Surveillance System surveys.

Findings: In analyses pooled across all years, models using the combined tax measure explained approximately 20% of state binge drinking prevalence, and documented more negative tax elasticity (-0.09, P = 0.02 versus -0.005, P = 0.63) and price elasticity (-1.40, P < 0.01 versus -0.76, P = 0.15) compared with models using only the volume-based tax. In analyses stratified by year, the R-squares for models using the beer combined tax measure were stable across the study period (P = 0.11), while the R-squares for models rely only on volume-based tax declined (P < 0.0).

Conclusions: Compared with volume-based tax measures, combined tax measures (i.e. those incorporating volume-based tax and value-based taxes) yield substantial improvement in model fit and find more negative tax elasticity and price elasticity predicting adult binge drinking prevalence in U.S. states.

Keywords: Ad valorem tax; alcohol control; alcohol tax; binge drinking; elasticity; excise tax; harm reduction; prevention; tax structure.

Publication types

  • Research Support, N.I.H., Extramural

MeSH terms

  • Adult
  • Alcoholic Beverages / economics*
  • Binge Drinking / epidemiology*
  • Commerce / statistics & numerical data*
  • Female
  • Humans
  • Linear Models
  • Male
  • Prevalence
  • Taxes / statistics & numerical data*
  • United States / epidemiology
  • Young Adult