Alcohol-Market Controls Like Michigan’s Do Not Appear to Advance Public Health and Safety, Study Finds

State economic restrictions raise consumer prices, reduce availability and limit entrepreneurial opportunities to no clear end, say authors

For Immediate Release
Monday, May 14, 2012
Contact: Michael D. LaFaive
Director of Fiscal Policy
or 
Michael D. Jahr 
Vice President for Communications
989-631-0900

MIDLAND — Michigan’s wholesale hard liquor monopoly and retail alcohol restrictions do not provide discernible public health and safety advantages, according to a Policy Brief released today by the Mackinac Center for Public Policy. With policymakers discussing reform of the state’s alcohol distribution system, such regulations of the alcohol marketplace should be scrutinized, according to authors Michael LaFaive, fiscal policy director at the Mackinac Center, and Antony Davies, associate professor of economics at Duquesne University.

“The main defense of Michigan’s convoluted and monopolistic system is that it enhances public health and safety,” said LaFaive. “The evidence, however, does not suggest that ending state government’s hard liquor monopoly and retail density restrictions would lead to worse health and safety outcomes. Michigan consumers and businesses are experiencing higher alcohol prices and reduced availability to comply with state regulations that appear to be ineffective.”

LaFaive and Davies provide original analyses of the data and a review of existing studies. The Policy Brief examines such statistics as total alcohol-attributable deaths, binge drinking and alcohol-impaired and alcohol-involved traffic fatalities. In keeping with comparisons made by opponents of alcohol market reform, U.S. states are divided into two basic groups: the 32 “license” states, which simply license private alcohol producers, wholesalers and retailers; and the 18 “control” states (including Michigan), where state government acts as a wholesaler of beer, wine or hard liquor. LaFaive and Davies also subdivide the 18 control states into “heavy,” “medium” and “light” control states, but find that regardless of the degree of control, these states did not typically achieve better alcohol-related health and safety outcomes.

The authors also review two studies of retail density regulations, which limit the number of bars and alcohol stores in an area. This discussion includes a 2010 doctoral thesis by a University of Michigan scholar who found that a higher density of retail alcohol establishments in rural Michigan areas was actually associated with less alcohol consumption, binge drinking, and drinking and driving.

Davies noted that many state strictures designed ostensibly to protect public health and safety do neither. “When it comes to reducing alcohol-related fatalities,” he said, “those who are more concerned with results than appearances need to take a close look at the effects of alcohol control policies. In a best case scenario, state control of alcohol markets has no effect on alcohol-related fatalities. In many cases, state control is associated with increased alcohol-related fatalities.”

Last year, a state Liquor Control Advisory Rules Committee was charged with developing alcohol control policy reform proposals for Michigan. The release of the committee’s recommendations is expected this spring or summer.

The Policy Brief, titled “Alcohol Control Reform and Public Health and Safety,” is available online at http://www.mackinac.org/16902. Other essays on reform of Michigan’s regulation of alcohol distribution are posted at http://www.mackinac.org/16531.

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