Higher Alcohol Prices and Student Drinking

Summary of working paper 8702
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Raising the price of alcohol is an effective policy instrument for reducing excessive drinking by young adults.

Raise the price of alcohol substantially and some college students will not drink or will drink less. That conclusion in a paper by Jenny Williams, Frank Chaloupka, and Henry Wechsler may be no surprise to economists raised on the premise that higher prices reduce demand. But it may be helpful to administrators of colleges and universities and their neighboring communities. They are troubled by binge drinking with its too often grim consequences of deaths, property damage, injuries arising from fights, unwanted sexual encounters, and encounters with the police. Sometimes such heavy episodic drinking interrupts the study of other students or forces them to "babysit" for a drunken student. A survey by the American Medical Association found that college binge drinking is among the top concerns of parents with college-aged children.

In Are There Differential Effects of Price and Policy on College Students' Drinking Intensity? (NBER Working Paper No. 8702), the three authors use data from the Harvard School of Public Health's College Alcohol Study, which surveyed students at 130 representative colleges and universities in 1997 and 128 schools in 1999. These produced 22,831 responses from undergraduates under the age of 25. One key finding is that students faced with a $1 increase above the $2.17 average price for a drink will be 33 percent less likely to make the transition from being an abstainer to a moderate drinker, or from being a moderate drinker to a heavy drinker. So, raising the price of alcohol is "an effective policy instrument for reducing excessive drinking by young adults," the authors report. An increase in the price of alcohol, the authors note, could be achieved by eliminating price specials and promotions offered by bars and other alcohol-serving establishments near schools, raising excise taxes on alcoholic beverages, and eliminating the feature of some parties where students pay a fixed fee to enter and then can drink as much as they like.

The authors also compare the impact on student drinking habits of the bans that some schools place on alcohol consumption on campus -- by both students and staff, or students alone, regardless of age -- with the outcome at schools that do not ban alcohol except for those under 21. The students attending colleges and universities with a ban are 26 percent less likely to shift from being an abstainer to a moderate drinker. But the bans have no effect on the transition from moderate drinker to heavy drinker, the authors find. They caution that they had no way of measuring how well schools enforced such tough policy measures.

This study defines an abstainer as someone who reports not having drunk any alcohol in the past 30 days. By one measure, a moderate drinker consumed less than five drinks during a typical drinking occasion in that time span if male and less than four if female. A heavy drinker, again depending on gender, has had more than five or four drinks during a typical drinking occasion in 30 days. On this basis, 32 percent of students were abstainers, 37 percent were moderate drinkers, and 31 percent were heavy drinkers.

The second measure defines a moderate drinker as one drinking but not getting drunk, or getting drunk three or fewer times, in the previous 30 days. A heavy drinker is described as getting drunk more than three times in the same 30 days. (Drunk is defined as being unsteady, dizzy, or sick to the stomach.) By this measure, 32 percent were abstainers, 47 percent moderate drinkers, and 21 percent heavy drinkers.

-- David R. Francis