Pricing and Availability

Alcohol Beverage Control Policies: Their
Role in Preventing Alcohol-Impaired
      Driving '

Alexander C. Wagenaar, Ph.D.
77~ University of Michigan

Susan Farrell

National Institute on Alcohol Abuse and Akoholism

The phrase "alcohol control policies " refers to the entire constellation of laws and
regulations at the Federal, State, county, and city levels that affect how alcoholic
~,cvcragcs are manufactured, packaged, distributed, sold, and consumed. Control
politics are central in any comprehensive discussion of the prevention of impaired
(Iriving because the availability of alcoholic beverages is a necessary condition for
inlpaircd driving. Furthermore, alcohol control policies, interacting with private market
rncchanisms, directly determine the degree to which beverage alcohol is available to
consumers.

Concern with alcohol control policies has grown over the past two decades. Scientists
xnti professionals in the alcohol studies field increasingly recognize that alcohol is a risk
lxtor for a number of health problems, including traffic crashes, at both the individual
:ind societal levels. That is, the more alcohol a given individual drinks, the higher the risk
Ior health problems associated with that drinking, including automobile crash involve-
rncnt (NHTSA 1985). 2

Perhaps more important for public policy, the relationship also holds true at the
:ygrcgatc level. As a society consumes more alcohol, rates of alcohol-related problems
xc likely to increase (Moore and Gerstein 1981). Clearly, the relationship is not
ctnc-to-one, since hundreds of factors contribute to each health problem, including
motor vehicle injuries. For example, an increase in injury risk associated with higher
:Jcohol consumption could be offset by a decrease in risk resuking from other actions,
\uch as increased safety belt use. The important point is that alcohol consumption and
xsociated problems such as traffic crashes are viewed as public health problems, with
;I large population at risk of involvement in alcohol-related crashes. To be most effective,
prevention strategies should reduce risks across the population, rather than focus on the
rclalivcly small segment of society that at any given time exhibits extensive problems with
alcohol (i.e., addicted drinkers). Since customs and patterns of alcohol consumption

I  Warm thanks are expressed to several individuals who provided helpful comments On an earlier draft:
f larold Holder, James Mosher, Joan Quinlan, and Fredrick Streff.
2  Obviously, the relationship bemen alcohol consumption and alcohol problems is not deterministic, but
probabilistic. Increased consumption of alcohol increases the probability of associated problems, such as
`nfficcrashes. IMany individual differences and situation-specific factors affect the Outcome in any given case.


BACKGROUND PAPERS

apparently spread through the population by social diffusion (Skog 1980,1985), alcohol
control measures are likely to affect all consumers of alcohol, including both those with
low-risk drinking patterns and those with high-risk drinking patterns.

Another consequence of the public health view is recognition that very small changes
in behavior by huge populations can result in substantial net benefits to society in terms
of reduced alcohol-related problems. For example, a small reduction in an individual's
alcohol consumption is not likely to have an immediately observable effect on that
person's health.

However, the same proportionate decrease in alcohol consumption across the entire
society is much more likely to have demonstrable benefits in terms of reduced rates of
alcohol-related problems. Therefore, the relevant consideration is not whether a specific
alcohol control policy has an observable effect on given individuals, but whether changes
in behavior (perhaps undetectable at the individual level) cause demonstrable changes
in rates of health problems in the aggregate.

Alcohol control policies might affect impaired driving by two mechanisms. First, such
policies encourage or restrain the total amount of alcohol consumed, and amount is a
risk factor for impaired driving and the injuries that result. Second, specific control
policies alter thepattern of alcohol consumption (i.e., how a given quantity of alcohol is
consumed across time and across situations). For example, it is sometimes suggested
that policies that encourage drinking in one's own home rather than in a bar or tavern
be adopted to reduce the likelihood of impaired driving. Obviously, such policies might
reduce traffic crashes but exacerbate other problems associated with alcohol, such as
household injuries or spouse or child abuse.

This chapter has three objectives. Fist, we describe the types of laws and regulations
included under the broad rubric of Alcohol Beverage Control (ABC) policy. We briefly
discuss many dimensions of ABC policy to encourage a broader consideration of the
mechanisms already available that may be useful in efforts to reduce alcohol-impaired
driving and its damaging consequences. We do not include a lengthy discussion and
analysis of the research evidence for the efficacy of each of these many policy dimensions
in reducing alcohol consumption and alcohol-related problems. For most dimensions of
ABC policy, evaluation research is scarce, and many of the studies that are available have
major research design or implementation problems that limit confidence in the results.
Therefore, the second objective is more modest. We identify ABC policies that have a
significant body of research available, specifically those for which there is a scientific
basis for assessing their utility in reducing impaired driving. The third objective is to
present recommendations for changes in ABC policy and its application, acknowledging
that both scientific and political considerations necessarily influence both the develop-
ment and implementation of public policy.

Alcohol Control Policies

To structure the discussion of the wide variety of alcohol control policies, we have
grouped them into eight categories:

   o  Economic control policies

   o  Marketing control policies

3  This is not to minimize the benefits of relatively small changes in consumption in certain situations. For
example, reducing a driver's blood alcohol concentration from 0.08 g/100 ml to 0.01 g/100 ml by consumption
of hvo rather than four drinks in an hour reduces the risk of involvement in a traffic crash by more than SO
percent (Jones and Joscelyn 1978).


   .  Structure of the distribution system


   0  Beg&&on of individual outlets

   o  Sehmg/serving control policies


   .  Controls on product contents and packaging


   0  Legal availability control policies

   .  Social availability control policies
Some regulations span these categories; we have placed them in the category with
shich they are most closely identified. The major function of the ategori&on is
heuristic-to show the breadth of policies that fall under the term "alcohol control
policy" and to show how specific policies are conceptually related.

3

Economic Control Policies

ne most significant influence of ABC policy on the price of alcohol is the level of
excise and sales taxes on those beverages. Some jurisdictions have special tax rates for
,pcciBc products (e.g., alcoholic beverages containing local citrus products are treated
favorably in Florida). Federal excise tax rates on alcohol vary across beverage types (e.g.,
hccr, tine, distilled spirits). They are levied on the quantity sold (e.g., bottle, barrel,
gallon) rather than on price, and are not adjusted for inflation. Except for a small increase
in the tax on distilled spirits, Federal excise taxes have remained constant since 1951. As
;1 result of this and other factors, the real price of alcoholic beverages has fallen
aut,stantially over the last several decades. State excise taxes on alcohol have been
iucreascd periodically, but also tend to fall behind inflation. In addition, the effective
price of alcohol to consumers is influenced by levels of disposable income available, with
;rlc(~hol becoming less expensive when macroeconomic conditions are favorable and
incomes rise, unless retail alcohol prices rise accordingly.

A number of other economic control policies affect the (nominal) price of alcohol to
consumers. In some States, for some beverage classes, public policy determines the exact
lcvcl of retail price charged to consumers, and prices are uniform throughout the
jurisdiction. In some cases, price levels and variability are controlled, short of specifica-
tion of exact retail prices of alcohol. Minimum/maximum prices can be established
directly, or minimum/maximum markups over wholesale prices can be authorized.
Rcb~tcs of purchase price after the sale arc prohibited in some areas, as are special price
promotions such as "happy hour" discounts. Other inducements to purchase alcohol-
such as coupons, gifts, and prizes-may be regulated or prohibited. Provisions under
which credit can be extended to retailers and consumers for the purchase of alcohol also
idhmcc the cost and accessibility of alcohol.

Finally, the price of alcohol to some consumers is significantly affected by whether
alcohol purchases are tax deductible (Mosher 1983). For those in higher income
categories (i.e., with higher marginal tax rates), tax deductions for alcohol consumed in
the course of business activity effectively reduce the price by one-third.

Marketing Control Policies

Most discussion of ABC policies concerning marketing focuses on restrictions on the
advertising of alcoholic beverages. Advertising may be prohibited outright for some
beverages in some media. More commonly, the content of advertising is regulated.
Content issues include whether prices may be listed, whether the alcohol content of the
advertised beverage may be stated, whether actual consumption of alcohol may be
depicted, and minimum age for models that may be used. Current policies frequently
include limits on more subjective characteristics, such as content that appeals to
"Prurient interests"; is "offensive, gaudy, or blatant"; "' tllustrates women sensuously';


BACKGROUND PAPERS

uses "religious signs or symbols"; or uses words like "booze" or "saloon." Current
Federal regulations include language regarding limits on misleading or deceptive adver-
tisements, although these limits have not been consistently enforced (Mosher and
Wallack 1981). Prohibitions on lifestyle advertising bave been suggested. Lifestyle
advertising closely ties alcohol consumption to personal, financial, athletic, and sexual
satisfaction and success, in contrast to advertising that focuses on specific characteristics
or descriptions of the beverage.

Which media are appropriate for alcoholic beverage advertising is an issue in ABC
policy. Should such advertising be permitted on billboards and in the broadcast media,
where a substantial part of the audience is under the legal drinking age? A similar
question holds for magazines having most of their readers under the legal age. The role
of advertising revenues in influencing media coverage of health and social consequences
of alcohol use is also relevant. The extent of such influence regarding alcohol is currently
unknown. However, research has shown a clear relationship between amount of revenues
received from tobacco advertisers and editorial content on the hazards of smoking.
Publications with large numbers of cigarette advertisements rarely mention the hazards
of smoking in their articles on health (Warner 1985,1986).

In addition to advertising, many other dimensions of the promotion of alcoholic
beverages are susceptible to regulation. Displays and posters promote alcoholic
beverages at the point of sale. T-shirts, jackets, and other clothing reinforce messages of
advertising campaigns. Other products with beverage alcohol names and images are
frequently marketed (e.g., Bud Light Spuds MacKenzie dolls are sold in toy and novelty
stores). Sponsorship of sporting matches, music concerts oriented toward teenagers
(rock concerts), and other events also promotes alcoholic beverages. Alcoholic
beverages are distributed free of charge at special promotions. Fees are paid to movie
producers in exchange for depicting on-screen, integrated into the plot, the use of a
specific brand of alcoholic beverages. This practice constitutes advertising even though
viewers may not perceive it as such.

In addition to controls on alcoholic beverage advertising, requirements for counter-
advertising have been proposed. Requiring advertisements on the hazards of alcohol
("equal-time" policies) and specifying that alcoholic beverage containers have warning
labels regarding those hazards are frequently mentioned as means to partially balance
advertising claims that encourage alcohol use with information on the risks of such use.
(Rarely do proposals for counter-advertisements literally specify "equal time." Typical-
ly, a lower ratio of advertisements to counter-advertisements is proposed, for example,
one counter-advertisement for every four or five advertisements.) Other proposals
include compulsory warning messages in all alcohol advertising (similar to the warnings
in cigarette advertisements) and required warning posters where alcohol is sold or
consumed.

Finally, allowing or limiting the tax deductibility of advertising and other promotional
efforts is another dimension of ABC policy that affects the marketing of alcoholic
beverages.

Structure of the Distribution System

The most commonly noted characteristic of the alcoholic beverage distribution system
in the United States is whether a given State has a monopoly or license system. States
are frequently dichotomized as to whether they have a monopoly on alcohol sales or
whether they license private enterprises to distribute alcoholic beverages. In reality, the
monopoly-license dimension is a continuum, with States distributed at varying points
according to the degree to which they control alcohol sales. Monopolies are frequently
limited to a single class of beverage; for example, distilled spirits may be monopolized,
while beer and wine are not. Monopolies may be limited to the wholesale level, or may


i~,,Tr both &oiesalc and retail sales. Conceptual an! empirjc.? development of scales
, , n,c.sure where each State is on the control contmuum 1~ m the very early stages
;;r,,l~cr and Jams 1987). Such development should be encouraged to help move the
rcsc.rch and policy diSCUSSiOns away from the simplistic tendency to dichotomize
J&&ulion systems.

~~~~~~~~~ to rhe degree to which the distribution system is a public monopoly is the
.Iruz(ult' and power of the agencies responsible for alcoholic beverage control. The
:lu,T,t,c'f and characteristics of the people on the governing board, the nature of the
,,l,~~,~in[ing authority, and the grounds for removal of board members and the agency
,j;rcc[nr affcct how.responsive the control agency IS to local commumty concerns about
.,j<-irhnl outkts.

(;c~vcrnmcnt regulation affects many other dimensions of the distribution system
,[ruclurc, and these dimensions warrant attention regarding their effects on alcohol
iL,nsumption and associated problems such as alcohol-impaired driving. Regulation of
franchi.cc alcohol outlets, amount of competition permitted, degree to which private
,~~~,n~lpolics or oligopolies are permitted, provisions allowing localized prohibition of    '
,,l~~~h~>l salts, and extent of local government or community review of alcohol outlets are
,M]V ;I few of the dimensions of ABC policy that directly affect the structure of the
.IIc;,hoIic hcxrage distribution system (Roth et al. 1987).

l<cgul;ltion of Individual Alcohol Outlets

~1 ;,ny analvsts use the term "physical availability" to refer to the distance in space ad
, ,,,,c tlcrwccn-individuals and a source of alcohol. A number of ABC policies affect when
.,rlk~ \vtlcrc people can acquire alcoholic beverages. Typically, the number and density of
rcl;lil o~l~~t~ is limited by population or geographic area, with varying limits for different
~~~~~~ of ()U~IC~S (e.g., off-premise or on-premise consumption outlets; beer, wine, or
(ii\tittcd spirits outlets). Locations for alcohol outlets are controlled by prohibikms on
.,lcchol outlets that are too close to schools, churches, or another alcohol outlet. When
Iic-cwing new outlets in urban areas, proximity to public transportation should be
~.onGlcrcd to dccrcase the necessity of automobile use by impaired bar and tavern
I).llrc)ns (Ross 1982).

~11 S~atcs limit the days or hours that alcoholic beverages may be sold. Allowable
~~p~.nirl~~ and closing hours vary from State to State, and sales on Sundays and holidays
111 my txz prohibited or restricted to a few hours or to specific types of beverages.

Whether it is easy to open a new alcohol outlet or maintain a current outlet is
inllucnccd by license fees, limits on who may own a license, requirements for reporting
.lnd rccordkccping, financial means requirements, and availability and rates of man-
cl:ltcxy litibility insurance.

ABC policies also influence the nature and design of retail alcoholic beverage
r\t:It)lishmcnts. The types of retail establishments that may sell alcoholic beverages are
JI\~ ofkn restricted. The following types of outlets may be permitted to sell or restricted
from .tclling alcoholic beverages: drug stores, convenience stores, grocery stores, hotels,
rcQW sports stadiums, concert halls, private clubs, restaurants, and fast food res-
I;lurank The architecture, lighting, visibility, number and placement of windows and
clo(P seating arrangements, and other physical characteristics of specific outlets - par-
`icularly those for on-premise consumption-are typically circumscribed to some de-
Srcc. A number of ABC statutes and regulations specify other products that an alcohol
`~lct maYa may not, or must, sell. For example, all on-premise alcohol outlets may be
rcquircd to sell food or nonalcoholic beverages. The minimum portion of total revenues
"lowable from food sales may be specified. Whether gasoline stations and convenience
5*orcs that Sell gasoline should be allowed to sell beverage alcohol is currently under
dchatc in several States. Other activities in alcohol establishments may be restricted; for


6

BACKGROUND PAPERS

example, nude dancing may be prohibited in places where alcohol is served. Many such
regulations on specific alcohol outlets affect whether a new outlet opens, the charac-
teristics of that outlet, the specific segment of the market it appeals to, the pattern of
drinking encouraged by the establishment, and, as a result, the risk of alcohol-impaired
driving.

Selling/Serving Control Policies

In addition to policies affecting alcohol outlets, many statutes and regulations, as well
as a large body of case law, affect specitic practices concerning how alcoholic beverages
are sold or served. Some types of sales/serving practices are simply prohibited. On-
premise consumption of alcoholic beverages has been limited to beer and wine in some
jurisdictions, prohibiting sale of liquor by the drink. Self-service is not always allowed.
Purchase of drinks "by rounds," where one person purchases drinks for a large group,
may be prohibited. Size of serving containers may be controlled, prohibiting sales by the
pitcher, for example. Serving alcohol to certain categories of `consumers is typically
prohibited. Such categories may include underage patrons, intoxicated drinkers,
"habitual drunkards," or "known alcoholics." Finally, training may be required for those
who sell or serve alcoholic beverages.

At least half of alcohol-related traffic crashes involve drinking at an on-premise
establishment, even though only about a quarter of all alcohol sold is distributed by
on-premise outlets (O'Donnell 1985). As a result, regulation of on-premise outlets may
be particularly important for the prevention of impaired driving.

The best known dimension of ABC policy related to selling and serving practices is
"dram shop" liability, that is, liability of sellers or servers for damage caused by alcohol-
impaired persons. The typical case involves a bar patron who leaves an establishment
after consuming large amounts of alcohol, and, while driving home, causes a traffic crash
that maims or kills another motorist. The exact nature of the server's liability varies
considerably across jurisdictions and is the consequence of complex interactions among
statutory specifications, case law, and common law. Furthermore, administrative, civil,
and criminal sanctions may be involved. Liability has typically been limited to commer-
cial sellers/servers of alcoholic beverages. However, there have been cases in which social
hosts have been held liable for damage caused by intoxicated guests, particularly if the
guests are under the legal age.

Controls on Product Contents and Packaging

The amount of alcohol in alcoholic beverages is the most relevant product-content
issue in terms of preventing impaired driving. Federal law currently prohibits labeling
beer to show alcohol content unless State law requires such labeling. Beverages with very
low alcohol content are frequently not considered alcoholic beverages. If such products
(e.g., "near beer" with 0.5 percent alcohol) are marketed to underage drinkers, and if
these drinkers use them as a gateway beverage before moving on to "real" beer,
regulation might be considered appropriate. On the other hand, if consumption of
very-low-alcohol beverages displaces consumption of beverages with higher alcohol
content, tangible benefits in terms of reduced alcohol-impaired driving may result.
Low-alcohol beer (2-3 percent alcohol) is another product that may affect alcohol-
impaired driving, depending on whether the beverage substitutes for the same quantity
of higher alcohol beverages or leads to adding new drinking occasions to existing
consumption patterns.

A major component of the marketing strategies of alcoholic beverage industries'is the
development of new brands that are positioned to appeal to specific segments of the
market. For example, some brands of beer are marketed to working-class males, others
to upper middle-class males; some are targeted to blacks, others to women. Because


.h markct segmentation is central in efforts to increase alcohol consumption, SOme
;yzc.rchers have suggested that commo$fizafioq of the %.efage alcohol market be
,,-idcred (McGuinness !988>. Cpnfmdtlzatlon mvolves htmg the market to a small
numkr of products and dlfferentlatmg them based on .pr$ct content, rather than on
[hc image of the product and the market-segment for which d 1s positioned. For example,
!hr kc. market might be restricted to hght, medmm, and heavy beer, based on alcohol
il,nrcnt. With the exception of specifying the type, all packaging.and labeling would be
i,lcnlicd across all brands. The implications of such a move toward generic alcoholic
1Yvcr3ges are complex and would represent a dramatic change from the current market
rwcwre.

-

Incrcscd understanding of the nature of beverage alcohol markets and the potential
rc,lC `,fABC policy in structuring those markets to minim& risks associated with alcohol
m3v help identify less dramatic (and more feasible) regulatory changes that nevertheless
miiht minimize adverse effects on public health. For example, wine coolers are new
pr;Klucts that have been sumssftiy marketed in recent years. They are &signed to
~l~pca] to a different population from traditional wine drinkers. Even more recently, w&e
<oc)lcrs have been packaged in single-serving boxes that are idistin~ishable from boxes
contrrining fruit juice or punch (Trauma Foundation 1988). Effects of such new &oh&
~~roducts on drinking patterns and risks have not been studied, but they may warrant
,~Jditiwlal attention.

Fin:lIIy, many detailed regulations deal with how various alcoholic beverages may be
,,;&;lgcd. Container size (e.g., miniature versus larger bottles of distilled spirits),
nurnbcr of containers per case, position of any required tax stamps, ingredient labeling,
,IIK~ warning labels are a few examples. As noted already, warning labels may be one
conlponcnt of a larger effort to inform the public about the hazards of alcohol, particular-
ly when rclatcd to driving.

I ,rgal Availability Control Policies

`III~ principal limit on legal availability of alcohol is the minimum drink+ age. In all
S~;I(CS, alcohol may not be sold to those under the age of 21, and those under 21 are
1~ L)hilGtcd from purchasing, possessing, or consuming alcohol. Specific legislative lan-
F,:::IK~ vrrrics from State to State. Some States prohibit all consumption of alcohol by
unclcragc individuals; others prohibit purchase or possession for personal consumption.
hl;my States permit exceptions for religious ceremonies. Such legal proscriptions clearly
~1~1 not prcvcnt underage youth from acquiring alcohol; youth get alcohol from older
lricnds and associates as well as from establishments that sell to youth despite the law
(1 lingson ct al. 1983). Nevertheless, minimum-age statutes clearly make it more difficult
l'c)r youth to obtain and consume alcoholic beverages.

Other legal availability control policies limit the locations and times when alcoholic
tlcvcragcs may be consumed. Open container laws in many States prohibit possession of
.ln open container of alcoholicbeverage in a motor vehicle that is being driven on a public
rc)ad or highway. Consumption of alcohol in public is frequently prohibited, particularly
On publicly owned property such as parks, plazas, and school grounds. Consumption of
dlcohol is prohibited or restricted where risks associated with consumption are perceived
to bc high, or where many nondrinkers are present, such as in sports stadiums and
Wformance halls. Separate sections for nondrinkers may be required. Alcohol con-
sumption is frequently prohibited on the job, especially by those whose positions directly
3rrcct public safety, such as commercial pilots, large-truck drivers, and railroad en-
gineers. Policies mandating random or periodic testing of workers for alcohol (and other
drums) are currently under debate. Which occupations involve public safety to such a
dcSee as to warrant such testing remains an open question.


BACKGROUND PAPERS

Social Availability Control Policies

"Social availability" denotes the extent to which social norms regarding appropriate
or inappropriate consumption of alcoholic beverages encourage behavior patterns that
increase the risk of adverse effects of alcohol. The term is imprecise, and its definition
is neither broadly accepted nor consistent. Nevertheless, it does point out possible public
policies that may affect social norms regarding drinking, but that do not specifically
regulate the distribution and sale of alcohol. For example, the depiction of alcohol use
in movies and on television helps define social norms regarding drinking. The number
of drinking occasions shown on prime-time television is disproportionate. Wallack and
others (1987) found an average of 11 drinking occasions per hour during prime time in
the fall of 1984. Depictions of alcohol consumption might be delayed until late in the
evening to reduce the extent to which children and adolescents are exposed to them.
Films might be rated with regard to their depiction of alcohol and other drugs, and these
ratings provided to potential viewers.

Research Evidence: ABC Policies and
Alcohol-Impaired Driving

Many dimensions of ABC policy are potentially relevant to reducing alcohol con-
sumption, and thereby to reducing the death, disease, disability, and damage associated
with use of alcoholic beverages, including motor vehicle crashes. Based on our broad
knowledge about how economic, physical, and social environments influence people, the
possible role of these policies must be considered in efforts to prevent alcohol-related
problems, including traffic crashes.

However, stating clearly the known effects of each of the many dimensions of ABC
policy is much more difficult. First, each specific policy dimension alone may have an
effect so small as to be unidentifiable given available data and research technology.
Nevertheless, their effect as a whole may be substantial. Second, no scientific literature
exists on most of these dimensions of ABC policy, and limited research results are
available for others. Excellent comprehensive reviews of the literature on many facets of
ABC policy have already been published (Holder 1987; Ashley and Rankin 1988) and
therefore will not be repeated here.

Of all the dimensions of ABC policy, two have been studied in detail, particularly with
regard to their effects on traffic crashes. For these, sufficient scientifically credible
evidence is available to make unambiguous policy recommendations.

Minimum Drinking Age

The minimum legal drinking age is perhaps the most thoroughly studied dimension
of ABC policy. Furthermore, most of the studies explicitly focused on the effects of the
minimum age on motor vehicle crashes. In the early 197Os, 29 States lowered the
minimum age at which young people could legally purchase, possess, and/or consume
alcoholic beverages (or at which alcoholic beverages could legally be sold to them). Soon
afterward, there was a "dramatic increase" in the rate of alcohol-related crashes involv-
ing 18-, 19-, and 20-year-olds, according to a review by the General Accounting Office
(GAO 1987).

Many studies of the lowered legal age laws were made, and a number of reviews have
been published (Wagenaar 1983; Whitehead 1980). Reviewers concurred that, in the
better designed studies (Cook and Tauchen 1984; Douglass et al. 1974; Whitehead et al.
1975; Williams et al. 1975), a decrease in the minimum drinking age was associated with


PRICING AND AVAILABILITY

an increase in the rate of alcohol-related crashes among young drivers directly affected
by the change in the Iaw.

Persuaded in part by this evidence, States began to raise their minimum drinking ages
in 1976 - and a new generation of studies followed, In 1985, Congress asked GAO to
review these studies critically and evaluate the degree to which they provided empirical
support for Federal and State efforts to raise the legal drinking age (GAG 1987).

The GAO's search of the literature identified 32 studies of the impact of increasing
the minimum drinking age on traffic crashes involving young people in the age group
directly affected by the law. However, many of these studies were judged to be of
insufficient scientific quality to inform policy decisions. Of the 14 studies that did meet
GAO's methodological criteria, 4 addressed fatal crashes across several States and 5
addressed fatal crashes in individual states (Arnold 1985; DuMouchel et al. 1985; Emery
1983; FDCA 1983; Hingson et al. 1983; Hoskin et al. 1986; Klein 1981; Lillis et al. 1984;
Maxwell 1981; Schroeder and Meyer 1983; Wagenaar et al. 1981; Wagenaar 1987;
Williams et al. 1983). 4 The remainder addressed crashes with other outcomes, such as
injury and property damage. With one exception, these studies explored the effect of
changes in the law on the number of young drivers involved in fatal or injury-producing
crashes, whether or not the driver was killed or injured.

The GAO concluded that significant reductions in motor vehicle crashes among
young people occurred in almost every State examined (GAO 1987). Further, despite
differences iu study design, analytic methods, outcome measures, and State charac-
teristics, the reported reductions were often of similar magnitude. The findings provided
by the four multi-State studies of fatal crashes lend themselves most easily to generalii-
tion. These studies reported reductions ranging from 5 to 28 percent. Studies of in-
dividual States obtained similar results. The GAO noted that results from multiple
studies using multiple methods are rarely so consistent. States that did not show
significant reductions in traffic crashes generally had small populations and few crashes,
making it difficult to distinguish chance outcome from the effects of the law. Most of the
studies reviewed by GAO addressed the immediate effect of raising the minimum
drinking age. Two, however, explored the effects over the long term and found them to
be sustained (Wagenaar 1987; DuMouchel et al. 1985).

Two studies meeting GAO's criteria for scientific adequacy (Lillis et al. 1984, Perkins
and Berkowitz 1985) found that an increase in minimum drinking age was followed by a
decrease in self-reported incidence of driving after drinking among young persons
directly affected by the change in the law. However, both studies focused on New York,
so the extent to which these results can be generalized to other jurisdictions is unknown.

Alcohol Price and Excise Taxes

With the exception of a 1985 increase in the distilled spirits tax (from $10.50 to $12.50
per proof gallon), Federal excise taxes on alcoholic beverages have remained constant
for nearly four decades. If the Federal excise taxes on alcoholic beverages had increased
by the same percentage as consumer prices between 1951 and 1985 (314 percent), they
would have risen from $10.50 to $43.48 per proof gallon for distilled spirits, from $0.29
to $1.20 per gallon for beer, and from $0.17 to $0.70 per gallon for wine containing not
more than 14 peicent alcohol, Since most studies indicate that the price of.alcoholic
beverages influences consumption of alcohoi (Ornstein and Levy 1983; Levy and Sheflin

4  A number of the studies that GAO identified in the form inwhich theyoriginallyappeared-conference
papers and government reports-have since been published in the scientific literature. In their original
version, most of these (Wagenaar 1986; DuMouchel et al. 1987, Hoskin et al. 1986; Saffer and Grossman
1987~~) met GAO's criteria for scientific qualit)r, others did not (Males 1986).


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BACKGROUND PAPERS

1983), the concern about the effect of current tax policy on alcohol-related problems is
growing.

Three studies have specifically addressed the effect of changes m-the real price of
alcoholic beverages on motor vehicle crashes. Cook (1981) studied the impact of 38
changes in State taxes on distilled spirits that occurred in the 30 States with license (rather
than monopoly) systems between 1960 and 1975. Although these tax increases were
relatively small, nearly two-thirds of them were followed by a greater reduction (or
smaller increase) in the auto fatality rate than occurred in the median State in the same
year. Cook concluded that an increase in taxes on distilled spirits tends to reduce the
rate of traffic fatalities.

Saffer and Grossman (1987~) explored the extent to which variations in State excise
tax rates on beer contribute to fatal motor vehicle crashes among young people. They
found that States with higher real beer taxes have lower motor vehicle fatality rates for
three separate age groups (15-17, 18-20, and 21-24). Based on these results, they
estimated that if the Federal excise tax on beer had been indexed to inflation since 1951,
the number of 18- to 2O-year-oh& killed in motor vehicle crashes in 1975-81 would have
been reduced by 15 percent. If alcohol in beer had been taxed at the same rate as alcohol
in distilled spirits, the number of 18- to 2O-year-olds killed would have been 21 percent
lower. And a combination of these two tax policies would have reduced the number killed
by 54 percent. Saffer and Grossman (1987~) also suggested that tax policy may be a more
potent instrument than a uniform minimum drinking age of 21 for reducing traffic deaths
among young people-in part because evasion is not possible. In another study, using
different methods, Saffer and Grossman (1987b) estimated that a lOO-percent increase
in the tax on beer (approximately $1.50 per 24-unit case) would reduce highway deaths
27 percent among 18- to 2O-year-olds, 18 percent among 15- to 17-year-olds, and 19
percent among 21- to 24year-olds.

Discussion ancfPolicy Recommendations

To initiate the discussion, we offer three recommendations. First, no policy changes
should be considered that may result in an increase in the degree to which alcoholic
beverages are available without careful analysis, study, and public debate on the potential
deleterious effects of such a policy change on alcohol consumption and associated health
and social problems. Permitting retail sales of distilled spirits for on-premise consump-
tion where that particular form of sales had been prohibited is an example of a modest
policy change that may not be expected to have a demonstrable effect on alcohol use and
problems. However, careful analyses of such a policy change in North Carolina found
that a significant increase in alcohol consumption and traffic crashes followed the policy
change (Blose and Holder 1987; Holder and Blose 1987). A broader recognition is
needed of the many dimensions of ABC policies and of their potential role in the
prevention of alcohol-related problems. Making informed decisions regarding ABC
policies will require a substantially increased commitment to research and evaluation of
specific ABC policy dimensions.

Second, the minimum legal drinking age of 21 should be retained, and enforcement
of the age-21 policy should be strengthened. The weight of the evidence clearly shows
substantial benefits of the age-21 policy in terms of reduced traffic deaths and injuries.
The burden of proof now rests with those suggesting a lower age to demonstrate the net
benefits of such a change.

Finally, Federal excise taxes on alcoholic beverages should be adjusted for fairness
and equity in three dimensions. First, Federal excise taxes should be equalized according
to ethanol (pure alcohol) content across all types of beverages by an increase in the rates


PRICING AND AVAllABlLlrY

11

for beer and wine to those of distilled spirits. Second, the resulting equal tax rate should
be adjusted for past inflation by an increase that reflects changes in the Consumer Price
Index for the previous year. The extant research evidence shows that an increase in the
excise tax could have the largest long-term effect of all policy and program options
available to reduce alcohol-impaired driving. Therefore, States should also change their
excise taxes to equalize rates across beverages, adjust for past inflation, and index for
future inflation. The proposed changes in alcohol taxes do not represent a radical change
in policy. They simply increase fairness by taxing all alcohol at equivalent rates and
correct for the unfortunate effects of inflation over the past two decades.

me we acknowledge the size and political power of the alcoholic beverage in-
dustries, the time appears to be right for such a change in excise tax policy. A "window
of opportunity" (Kingdon 1984) for correcting the continuing erosion of alcohol excise
taxes may appear in the next year or so. A broad concern with healthier lifestyles (e.g.,
diet, exercise, stress reduction), concern about medical care cost containment, and
increased disapproval of drug use are providing a climate in which increased excise taxes
on alcohol are supported. The huge Federal budget deficit will create continuing
pressures to raise revenues and minimize program costs. Increases in alcohol excise taxes
meet these needs well. They raise revenues and decrease levels of major health problems
and their associated costs, and they do not require resources for new program develop-
ment and implementation.

Public support for increased alcohol taxes is high. A recent Statewide probability
survey in Michigan found 86 percent of the population in favor of increasing the alcohol
excise tax to pay for programs to combat alcohol-impaired driving (Wagenaar et al.
1988). In an October 1986 Gallup poll, 66 percent of respondents approved of doubling
the Federal excise tax on alcoholic beverages (Gallup 1987).

Finally, increased excise taxes can be recommended based on equity and justice
arguments. Consumption of alcoholic beverages costs society billions of dollars in
medical care, social damage, and lost productivity (NLL4A 1987). Those costs are
shared by all through general sales and income taxes, insurance premiums, and prices
of the goods and services consumed. An increased excise tax would result in a higher
proportion of those costs being paid by those who consume alcohol (Mosher and
Beauchamp 1983). Some may even want to term the excise tax a "user fee" rather than
a tax, since only those who consume this particular hazardous product have to pay it, and
its function is to ensure that consumers pay a higher proportion of the true costs of the
product.

Arguments can also be made against increasing the excise tax on alcoholic beverages.
The first is that such a policy may affect "social" driers but not the heavy drinkers who
are causing social and health problems. Alcoholics, because of their addiction, will obtain
alcohol no matter what the price, this argument contends. On the contrary, research has
shown that addicted users of alcohol respond to price changes along with nonaddicted
users (Cook 1981; Cook and Tauchen 1982). Even if addicted drinkers were less
responsive to price, about half of alcohol-related traffic fatalities are caused by non-
addicted or "social" drinkers (Vmgilis 1983). A substantial decime in this portion of the
traffic crash problem resulting from an excise tax increase would be a major success in
itself.

The second argument against an excise tax increase is that excise taxes are regressive
and fall disproportionately upon lower income families. It is true that lower income
consumers pay a higher proportion of their disposable income for a particular product;
however, alcoholic beverages are not necessities but, rather, discretionary goods. In
addition, alcohol consumption is positively related to income-those at higher income
levels consume larger quantities of alcohol and would therefore pay more of the tax.
Furthermore, regardless of income level, significant benefits will accrue to families in
which heavy alcohol users reduce their consumption because of the tax.


12

BACKGROUND PAPERS

A third argument against an increase in the excise tax rate is that government revenues
wih fall, ifin fact the policy is successful in reducing alcohol use. However, the best overall
estimates of the price elasticity of alcohol are typically more than 0.4,but less than 1.0
(Levy and Sheflin 1983). As a result, an increase in excise tax rates from current levels
will result in both increased government revenues and reduced consumption of alcohol.

Conclusion

Our objectives in this chapter were to:

o  increase awareness of the complex multidimensional nature of alcohol
beverage control policy in the United States,

o  review research on effects of selected ABC policy dimensions on
alcohol-related traffic crashes, and

o  stimulate discussion regarding the most promising dimensions of ARC
policy for the reduction of alcohol-impaired driving.

While it is unlikely that there will be universal agreement with every specific point in our
analysis, most scientists studying alcohol policy issues appear to support the recommen-
dations offered here. Nevertheless, this chapter has only outlined the approximate
boundaries of the dialog. Continued research, policy analysis, and discussion among
scholars, policymakers, and others will help further delineate the many issues involved.
Finally, health education efforts are needed to increase awareness among the general
public of the effects of ABC policy and to build public support for policy changes
necessary to effectively reduce alcohol-impaired driving and its life-disrupting conse-
quences.

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