PROHIBITION VERSUS TAXATION: RECONSIDERING THE LEGAL DRINKING AGE

Donald Kenkel

Contemporary Economic Policy, 1993, vol. 11, issue 3, 48-57

Abstract: The legal drinking age targets a group at a high risk of alcohol‐related problems. This paper argues that taxation could achieve the same benefits as the legal drinking age at a substantially lower social cost. Existing empirical research suggests that simultaneously lowering the legal age to 18 and taxing alcohol purchases at between 12 to 86 percent of the current price would achieve the same results as the current legal age. Levying a special teen tax only on young adults would minimize its social costs. Teen tax revenues between $564 million to $4.03 billion measure the net social gain of replacing the current prohibition on young adults' alcohol purchases with a taxation policy.

Date: 1993
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