Alcohol Consumption

Another common alcohol-related concern is the overall level of alcohol consumption. MAPPHS has also cited a Centers for Disease Control and Prevention task force report that concluded that there is “strong evidence that privatization results in increased per capita alcohol consumption, a well-established proxy for excessive consumption.”[19] The statement is apparently meant to imply that liberalizing Michigan’s alcohol control regime could lead to increased drinking, which in turn would produce higher rates of problem drinking.

Several points should be made here, however. First, the CDC report being referenced by MAPPHS is based on a review of existing literature about the privatization or deregulation of retail alcohol sales. Michigan state government closed its last government-owned retail store in 1989, some 23 years ago.[20] Since Michigan state government acts only as a wholesaler, not retailer, of spirituous liquor, the CDC study is unrelated to existing regulation in Michigan.

Some might argue based on this one literature review that Michigan could turn back the clock and remonopolize its retail operation in the name of public safety. Aside from the obvious difficulty of adopting such a course, it is important to recall that other research, including the research cited in this study, has arrived at a different conclusion about the efficacy of alcohol control regimes in reducing problems associated with excessive alcohol consumption.[21]

Is it possible, however, to find a correlation between alcohol-control regimes and decreased alcohol consumption (as opposed to alcohol-related harms)? Indeed, it is. One of the co-authors of this Policy Brief, in fact, found in earlier research that light-control states had lower rates of alcohol consumption and that this relationship was statistically significant.[22]

Such a finding raises a question about the goal of alcohol control, however. If the goal is reducing consumption on the whole, then the most effective approach is almost certainly not the light-control regime that Michigan has adopted. Instead, it is a return to Prohibition.

America has already tried alcohol prohibition, however, and the general consensus is that the public-health hazards of criminalizing the alcohol trade exceeded the benefits of decreased alcohol consumption. This observation returns us to a public-health goal that seems more appropriate: reducing the harms of excessive consumption. And as we noted above, there is no established relationship between alcohol-control regimes and fewer alcohol-related harms.

In the same vein, it is worth reflecting on what it would mean to act on the CDC’s observation by instituting additional state alcohol controls short of outright prohibition. In the study cited earlier, Boudreaux and Williams comment on the link between per-capita alcohol consumption and drinking problems:

Not surprisingly, the likelihood of dying from alcohol-related causes rises with per-capita consumption of alcohol. Our analyses reveal a highly significant correlation between alcohol-related death rates and per-capita alcohol consumption, a relationship which can be estimated. Specifically, a one-gallon-per-year increase in a state’s per-capita alcohol consumption increases that state’s alcohol-related death rate by about three percent.

While this kind of strong correlation can be seductive to policy makers, it should be noted that a one-gallon reduction in per-capita alcohol consumption is a 40 percent reduction in total consumption – a rather considerable amount. And, if a state were to achieve a 40 percent reduction in consumption, it would still have to craft a strategy for the 97 percent of deaths not impacted. This finding indicates that attacking problem drinking through population level consumption controls, the philosophy behind the control-state system, is not a particularly useful strategy.[23]
[Citations omitted.]

Boudreaux and Williams also suggest a reason why state-level controls probably fail to achieve the desired results:

… [I]t’s worth noting that, because most truly abusive drinkers are not particularly responsive to prices, it takes really draconian regulatory restrictions or high taxes to actually get problem drinkers to significantly reduce their drinking. And because abusive drinkers’ alcohol consumption accounts for such a large percentage of measured per-capita alcohol consumption, meaningfully reducing measured per-capita alcohol consumption is impossible without such draconian restrictions or taxes.[*]

[*] Boudreaux and Williams, “Impaired Judgment: The Failure of Control States to Reduce Alcohol-Related Problems,” (Virginia Institute for Public Policy, 2010), 5, n. 3, (accessed March 27, 2012). The idea that problem drinkers are less responsive to increases in price has been investigated elsewhere. In a paper for the National Bureau of Economic Research, four scholars from Yale University and a fifth from Hunter College used Health and Retirement Survey data to investigate how adults’ alcohol consumption was affected by price. They summarized: “Only a subgroup responds significantly to price. Importantly, the unresponsive group drinks more heavily, suggesting that a higher price could fail to curb drinking by those most likely to cause negative externalities. In contrast, those least likely to impose costs on others are more responsive, thus suffering greater deadweight loss yet with less prevention of negative externalities.” Padmaja Ayyagari et al., “Sin Taxes: Do Heterogeneous Responses Undercut Their Value?,” (National Bureau of Economic Research, 2009), (accessed April 12, 2012).