Hello folks, my name is Jim Leitzel and I generally hang out at Vice Squad. But the Overlawyered denizens have been kind enough to share their pixels with me this week, so here I am. I’ll probably talk mostly about vice, but I am an economist, not a lawyer, so I won’t be able to hold up my end of the lawyerly dialogue.

I’ll start with a quiz (though I won’t vouch for the correctness of my suggested answer). Imagine that you are concerned about three U.S. health-related problems: suicide, cancer, and sexually-transmitted diseases. Alas, you are limited to implementing only one policy reform. What should you do? To build suspense (is it working?), I’ll put my suggestion after the break…

You should raise the excise tax on alcohol. (Oh, you probably guessed, given my vice interest.) Not only would the higher alcohol tax help cut back on suicide, cancer, and STD transmission, it also would reduce violent crime and auto crashes. Kids would drink less and binge less often. You would become better looking and the weather would improve, too. (OK, I made up those last two, though the ?better looking? claim is not devoid of plausibility.)

Now there are all sorts of problems with alcohol taxes ? for instance, they are a blunt instrument that cannot easily distinguish between moderate (and perhaps health-improving) drinking and imbibing of the very socially costly variety. And extremely high taxes would put us back into the world of prohibition, and nobody wants that. Nonetheless, the good effects that stem from higher alcohol taxes are almost staggering; I can?t think of any other single policy that would be likely to have such broad benefits.

Current U.S. alcohol taxes are not high, in either historical or international perspective. Alcohol excise taxes are typically expressed in terms of so many cents per proof gallon of alcohol. As prices in general rise, the significance of such a tax will decline, unless the tax per gallon is simultaneously increased. Legislated tax increases since the 1950s have not kept up with inflation, so the real tax rate on alcohol has fallen, quite noticeably during the high-inflation 1970s. The story varies from state to state, but in general, alcohol taxes are much lower today (in real terms) than they were in the 1950s. And as there is a good deal of evidence that the “external” costs associated with drinking exceed current tax levels, a pretty strong case can be made for higher alcohol taxes — a much stronger case than applies to cigarettes, which generally seem to be taxed at levels exceeding external costs.

Wow, my first post on Overlawyered and I call for a tax increase! My hosts might be tempted to sue me.

Here are some references for the suicide, cancer, STD, and violent crime claims.

Chesson, H., P. Harrison, and W.J. Kassler, “Sex Under the Influence: The Effect of Alcohol Policy on Sexually Transmitted Disease Rates in the U.S.” Journal of Law and Economics, Vol. 39, No. 1, April 2000.

Cook, P.J., and M. J. Moore, “Economic Perspectives on Reducing Alcohol-Related Violence.” In S. E. Martin, ed, Alcohol and Interpersonal Violence: Fostering Multidisciplinary Prespectives, National Institute on Alcohol Abuse and Alcoholism Research Monograph No. 24, NIH Publication Number 93-3496, Bethesda, MD.

Sloan, F. A., B. A. Reilly, and C. Schenzler, “Effects of Prices, Civil and Criminal Sanctions, and Law Enforcement on Alcohol-Related Mortality.” Journal of Studies on Alcohol 55(4): 454-465, 1994.

Filed under: alcohol, guestbloggers