In recent years, a number of strategies have been proposed to reduce the heavy economic and human costs of alcohol abuse and alcoholism. Economic studies of the demand for alcohol suggest that drinking is sufficiently price responsive that raising the price of alcohol maybe an effective way of reducing overall consumption. Thus, raising excise taxes on alcoholic beverages could be used as a preventive activity to reduce the consumption of alcohol. However, little work has focused on the issue of whether increased alcohol taxes and prices reduce the problem areas of alcohol consumption -- heavy drinking in the aggregate or at a setting, or frequent alcohol consumption -- because most of this work has used data aggregated to the state or national level. Because heavy consumption, along with drinking and driving, are of greatest concern, it is important to know how taxes and prices affect the more problematic parts of the spectrum of alcohol consumption. This grant will examine the price responsiveness of the demand for alcohol, and whether heavy drinkers (at a setting or overall) are less sensitive to price than light or moderate drinkers, and whether frequent drinkers are less sensitive to price than infrequent drinkers. The study will use data from National Longitudinal Alcohol Epidemiological Survey (NLAES) data collected by NIAAA in 1991-92. These data on drinking patterns and individual characteristics will be linked to data on alcohol prices by geographic area. This grant is part of an Interactive Research Project Grant (IRPG) that will examine alcohol demand and patterns of consumption and labor market outcomes.
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