A case against the sin tax

June 25, 2012

Taxing alcohol is pretty effective at convincing moderate drinkers to consume less. But it does little to reduce heavy consumption of alcohol, according to a new study from the National Bureau of Economic Research.

beer excess alcohol consumption (Reuters)

Instead, researchers find that "heavy drinkers are more responsive to cues such as alcohol advertising and alcohol references in programming on TV and less responsive to price." The study explains why: heavy drinkers have less ability to self-regulate, so the psychological cues that prompt them to drink in the first place (e.g. ads glorifying alcohol) are more important than the reward, or lack thereof, at the end. By contrast, "higher excise taxes on alcohol reduce consumption by moderate drinkers."

The takeaway: restricting advertising is more effective than excise taxes if the goal is to reduce heavy drinking.

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