Paying a Few Pennies More for Your Beer Could Be Good for Your Health

Higher prices for booze can lower rates of alcohol abuse—but they may also place an unfair burden on people in lower income brackets.

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Aug 9 2018, 4:15am

Photo by Stocksy / Andrew Sebulka

Alcohol abuse is killing us. More than 88,000 people in the United States die from alcohol-related causes each year, and chronic liver disease and cirrhosis—often caused by excess drinking—were the tenth highest cause of death among men in 2015, according to the Centers for Disease Control. The financial cost is astounding as well, estimated at nearly $250 billion a year in lost productivity, medical bills, car accidents, and legal fees.

But what if we could change all that, or at least reduce the devastating health effects of alcohol abuse, simply by paying a little more in taxes for our booze? That’s what the World Health Organization is proposing in a new study in the current issue of the Journal of Studies on Alcohol and Drugs. The paper found that increasing excise taxes, which currently cost just pennies per drink in the US, could result in 500 additional healthy years of life for every million people. Extrapolate that to our country’s current population of 328 million and that could net 164,000 more healthy years of life for Americans.

“The single most effective way to restore health, which is currently being lost to hazardous or harmful alcohol use, is by raising taxes,” said the paper’s lead author and mental health program manager at WHO’s Europe office, Daniel Chisholm.

The idea is that by raising prices, people—especially those who drink to excess—will purchase and consume less. And that, in turn, will lower the harmful side effects of excessive drinking. “Consumers are quite sensitive to increases in price,” Chisholm added.

The authors reached their conclusion by populating a software modeling tool with existing data on current and projected mortality, along with risk for alcohol abuse by age and sex, among other factors, to estimate health gains from various interventions. The analysis looked at 16 large countries—including China, the United States, Russia, India, and Vietnam, among others—and spanned all income ranges. Hazardous or harmful alcohol consumption was defined as more than one drink a day for women and more than three drinks a day for men.

Saving lives for three cents a drink (or less)

The excise taxes Americans currently pay for alcohol are surprisingly low, averaging just three cents for a 12-ounce beer, three cents for a five-ounce glass of wine, and five cents for a 1.5-ounce shot of hard liquor, according to an earlier 2018 study in the Journal of Studies on Alcohol and Drugs.

The new paper proposes raising those taxes by 50 percent, which works out to a maximum of 2.5 cents for a shot of hard liquor. If you consume three such drinks a day, over the course of a year that would still just cost you $27. Not bad considering all the lives you will be saving—including, quite possibly, your own.

The one big downside to this plan is the tax’s disproportionate effect on those in lower income brackets. “People who are less well off, it’s going to hurt them more,” Chisholm conceded. If such a regressive tax doesn’t actually reduce consumption, it will just make it harder for those people to make ends meet, much the way some economists argue that increasingly high cigarette taxes have.

And while paying just a few pennies more per drink to save lives seems like a small price to pay, it may indeed be too low to move the needle. A prior study in the American Journal of Preventative Medicine found that a higher, 25-cent per drink tax would be needed to reduce excessive drinking among those who are most at risk for doing so.