Alcohol Advertising Bans and Alcohol Abuse: An International Perspective

The purpose of this paper is to empirically examine the effect on alcohol abuse of banning broadcast advertising of alcoholic beverages. The effect of a ban cannot be studied using data from one country because the adoption of new advertising bans is an infrequent event and requires many years for adjustment. However, an international data set can be used since there is considerable variation in the use of advertising bans across countries. The data used in this study are a pooled time series from 17 countries for the period 1970 to 1983. The empirical measures of alcohol abuse are alcohol consumption, liver cirrhosis mortality rates, and highway fatality rates. The cultural factors which influence alcohol use are measured by sets of country dummy variables. The empirical results show that countries with bans on spirits advertising have about 10 percent lower alcohol consumption and motor vehicle fatality rates than countries with no bans. The results also show that countries with bans on beer and wine advertising have about 23 percent lower alcohol consumption and motor vehicle fatality rates than countries with only bans on spirits advertising.

Wages and Working Conditions

This paper presents another extension of the approach initiated by Brown. As in Brown's work, the wage change specification is used to control for bias due to omitted ability data. Then, as in Duncan and Hoimlund's study, working conditions are measured using subjective self?reported data. However, in this paper, working conditions are measured by a single comprehensive variable. This approach eliminates omitted working conditions as a source of bias. The working conditions measure is then treated as an unobserved variable which limits measurement error to an unknown scale factor. The model is estimated using a technique derived by memiya (1978).

Alcohol consumption and Tax Differentials Between Beer, Wine and Spirits

Several public health interest groups in the United States have recently called for equalization of the federal tax on a unit of alcohol in beer, in wine and in spirits. This paper provides some new empirical evidence of what effect alcohol tax differentials have on total alcohol consumption. The data indicate that the greatest decrease in alcohol consumption results from an increase in spirits taxes, followed by beer taxes and then wine taxes. This suggests that the existing generally accepted taxation policy of placing the highest tax on spirits, a lower tax on beer, and the lowest tax on wine, results in the greatest reduction in total alcohol consumption.

The Demand for Social Interaction

In this paper social interaction is modeled as a consumer good. Social interaction may provide an externality in the form of social capital, but the primary reason that individuals engage in social interaction is that these activities directly yield utility. It is important to note that some measures of social interaction show declines while many do not. A model of household production is employed to derive the demand for social interaction. The model shows that the demand for social interaction is a function of its price, the price of other goods and income. The role of children and marriage in social interaction can also be explained in the model. The theory is tested with data from the General Social Survey (GSS) and the results show that social interaction can be explained as the consequence of utility maximizing behavior by individuals. Increases in education generally increase memberships but reduce visiting with relatives and friends. Increases in income generally increase memberships and some forms of visiting. The model predicts 70 percent, or more, of the time trends in social interaction. These results are in contrast to social capital theorists who have focused on the declines in social interaction and who have attributed these changes to factors such as increased community heterogeneity and increased television viewing.

Alcohol Consumption and Alcohol Advertising Bans

The purpose of this paper is to empirically examine the relationship between alcohol advertising bans and alcohol consumption. Most prior studies have found no effect of advertising on total alcohol consumption. A simple economic model is provided which explains these prior results. The data set used in this study is a pooled time series of data from 20 countries over 26 years. The empirical model is a simultaneous equations system which treats both alcohol consumption and alcohol advertising bans as endogenous. The primary conclusions of this study are that alcohol advertising bans decrease alcohol consumption and that alcohol consumption has a positive effect on the legislation of advertising bans. The results indicate that an increase of one ban could reduce alcohol consumption by five to eight percent. The alcohol price elasticity is estimated at about .2. The results suggest that recent exogenous decreases in alcohol consumption will decrease the probability of enactment of new bans and undermine the continuance of existing bans. Canada, Denmark, New Zealand and Finland have recently rescinded alcohol advertising bans. Alcohol consumption in these countries may increase or decrease at a slower rate than would have occurred had advertising bans remained in place.

Beer Taxes, the Legal Drinking Age, and Youth Motor Vehicle Fatalities

Based on a time series of state cross sections for the period from 1975 through 1981, we find that motor vehicle accident mortality rates of youths ages 15 through 17, 18 through 20, and 21 through 24 are negatively related to the real beer excise tax. We also find that the death rate of 18 through 20 year olds is inversely related to the minimum legal age for the purchase of beer. Simulations suggest that the lives of 1,022 youths between the ages of 18 and 20 would have been saved in a typical year during the sample period if the Federal excise tax rate on beer, which has been fixed in nominal terms since 1951, had been indexed to the rate of inflation since 1951. This represents a 15 percent decline in the number of lives lost in fatal crashes. The simulations also suggest that the lives of 555 youths per year would have been saved if the drinking age had been 21 in all states of the U.S. These figures indicate that, if reductions in youth motor vehicle accident deaths are desired, both a uniform drinking age of 21 and an increase in the Federal excise tax rate on beerare effective policies to accomplish this goal. They also indicate that the tax policy may be more potent than the drinking age policy.

Breath Testing and the Demand for Drunk Driving

This paper presents an empirical investigation of the effect of a preliminary breath test law on drunk driving behavior. A preliminary breath test law reduces the procedural problems associated with obtaining evidence of drunk driving and thus increases the probability that a drunk driver will be arrested. In 1985, only 23 states had a preliminary breath test law. According to the theory of deterrence, increasing the probability of arrest for drunk driving will reduce the future occurrence of this behavior. The data set employed to test the theory is a time series from 1980 to 1985 of cross sections of the 48 contiguous states. Four highway mortality rates are used as measures of drunk driving. The effect of the breath test law was estimated using four independent variable models and 12 dummy variable models. The four independent variable models were also estimated using Leamer's specification test. The purpose of using these alternative specifications and Leamer's specification test was to examine the breath test coefficients for specification bias. The econometric results show that the passage of a breath test law has a significant deterrent effect on drunk driving. Simulations with these results suggest that if all states had a preliminary breath test law, highway mortality could be reduced by about 2000 deaths per year.

Mental Illness and the Demand for Alcohol, Cocaine and Cigarettes

The purpose of this paper is to estimate the effect that mental illness has on the demand for addictive goods. Mental illness could affect the level of consumption of addictive goods and could affect the price elasticities of addictive goods. Demand theory suggests that mental illness would affect consumption if mental illness affected marginal utility. In addition, mental illness would affect the price elasticity if mental illness affected the rate at which marginal utility diminishes. The empirical models allow for endogeneity between mental illness and addictive consumption since prior research suggests such a relationship. The results show that individuals with a history of mental illness are 25 percent more likely to consume alcohol, 69 percent more likely to consume cocaine and 94 percent more likely to consume cigarettes. Individuals with a history of mental illness are responsive to price although the price elasticites differ somewhat from whose without mental illness. These results provide an added justification for higher taxes and other supply reduction activities since they show that these policies are effective with this high participation group. The results also suggest that an additional method of reducing the consumption of addictive goods is to subsidize the treatment of mental illness.

State Drug Control and Illicit Drug Participation

The purpose of this paper is to estimate the effect of state criminal justice expenditures and state public health expenditures on deterring illicit drug use. The empirical model is based on a demand and supply model of drug markets. The effect of a given expenditure on criminal justice or public health programs is dependent on the magnitude of the resulting shifts in the two functions and the demand price elasticity. A reduced form of the demand and supply model is also estimated. The data employed come from the 1990 and 1991 National Household Surveys on Drug Abuse (NHSDA). Data on state and local spending for drug related criminal justice and drug related public health programs were merged with the NHSDA. The main findings from the regression results are that drug control spending reduces drug use. However, the results suggest for marijuana users, the marginal cost of drug control exceeds the social benefits of drug control. This may not be the case for users of other illicit drugs. Spending for drug enforcement by police and drug treatment are found most effective in deterring drug use. However, spending for correctional facilities is never significant which suggests that a more efficient method of reducing drug use might be to reduce correctional facilities spending and increase spending on treatment.

Endogenous Drinking Age Laws and Highway Mortality Rates of Young Drivers

This paper presents estimates of the effects of the drinking age and beer taxes on youth motor vehicle mortality. The data set employed is a time series, from 1975 to 1981, of cross sections of the 48 contiguous states. Separate regressions for 15 to 11 year olds, 18 to 20 year olds and 21 to 24 year olds are presented. A simultaneous estimation model is used to account for the endogeneity .of the drinking age. The results show that during the sample period an increase in the drinking age to 21, which is approximately 8 percent, would have reduced mortality in the 18 to 20 year old group by approximately 14 percent. Also a 100 percent increase in the real beer tax, which is approximately $1.50 per case, would reduce highway mortality of 18 to 20 year olds by about 19 percent. This increase in the beer tax would also reduce mortality by about 8 percent for 15 to 17 year olds and by about 18 percent for the 21 to 24 year olds.