The Effects of Alcohol Excise Tax Increases by Drinking Level and by Income Level

Henry Saffer (), Markus Gehrsitz and Michael Grossman

No 30097, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The alcohol industry argues that alcohol excise taxes do not reduce heavy drinking because of substitutions to lower-cost products and that these taxes disproportionately burden low-income drinkers. Alternatively, some economists have argued that increases in alcohol excise taxes reduce heavy alcohol consumption. Using data from the Nielsen Homescan we investigate the effects of a large excise tax increase that raised alcohol prices. The results show that heavy drinkers reduce purchases, and this reduction is no different than the reductions by other drinkers. The results also show that only low-income drinkers pay more for ethanol after the tax increase.

JEL-codes: H20 I18 (search for similar items in EconPapers)
Date: 2022-05
New Economics Papers: this item is included in nep-dem and nep-hea
Note: EH
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Working Paper: The Effects of Alcohol Excise Tax Increases by Drinking Level and by Income Level (2022)
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