THE PASS‐THROUGH OF BEER TAXES TO PRICES: EVIDENCE FROM STATE AND FEDERAL TAX CHANGES

From a policy perspective, it is crucial to understand how changes in beer taxes affect retail beer prices. This study provides new evidence of the pass‐through rate of state beer taxes to prices in a post‐merger era. Our estimates that use state‐level beer tax changes suggest that a 10‐cent increase in beer taxes raises retail prices by about 17 cents. Comparable findings from the 1991 federal beer tax increase show a rise in retail beer prices of 19–22 cents. Our findings suggest that consumers fully bear the burden of increased beer taxes. (JEL H2, I0, D4)     

The Problem of Alcohol Advertisements in College Newspapers

Abstract

In a sample of college newspapers, alcohol advertisements made up approximately one-half of all national advertising. Most of these were for beer. In addition, most of the papers also carried local “on sale” alcohol ads. Ads for soft drinks and for books were far less prominent in the sample. Numerous beer ads contained a philosophy inimical to the aims of college education. Study, learning, science, campus organizations, graduation, and even education itself were ridiculed, and beer drinking was substituted for them. These appeals were considered in relation to studies of drinking problems on campus and peer pressures on students to join in the drinking. Campus efforts toward alcohol education were reviewed and outstanding programs singled out. It was suggested that students, faculty, and staff discuss the problem and seek some resolution.     

No booze? You may lose: Why drinkers earn more money than nondrinkers

A number of theorists assume that drinking has harmful economic effects, but data show that drinking and earnings are positively correlated. We hypothesize that drinking leads to higher earnings by increasing social capital. If drinkers have larger social networks, their earnings should increase. Examining the Gen-eral Social Survey, we find that selfreported drinkers earn 1014 percent more than abstainers, which replicates results from other data sets. We then attempt to differentiate between social and nonsocial drinking by comparing the earn-ings of those who frequent bars at least once per month and those who do not. We find that males who frequent bars at least once per month earn an addi-tional 7 percent on top of the 10 percent drinkers’ premium. These results sug-gest that social drinking leads to increased social capital. We thank Daniel Arce, Phil Cook, Rodolfo Gonzalez, Teresa Beckham Gramm, Nick McKinney, Tom Means, Jake Vigdor, and participants in the Faculty Development Endowment seminar at Rhodes College for helpful comments and suggestions. We gratefully acknowledge Rhodes College for supporting this research through a Faculty Development Endowment grant.     

HEALTH AND AMENITY EFFECTS OF GLOBAL WARMING

This study shows that climate change would probably reduce mortality in the United States by about 40,000 per year, assuming a 4.5° warmer climate—the IPCC best estimate of temperature change with a doubling of carbon dioxide. Benefits would extend to lower medical costs nationwide. Measuring willingness to pay by wage rates shows that people prefer warm climates and would be willing to give up between $30 billion and $100 billion annually for a 4.5° increase in temperatures. ( JEL Q25, J17, J31)     

EFFICIENCY EFFECTS OF EXCLUSIVE TERRITORIES: EVIDENCE FROM THE INDIANA BEER MARKET

The welfare effects of vertically imposed exclusive territories and the appropriate antitrust policy toward them have long been debated. This paper sheds light on the exclusive-territory controversy by examing the effects of Indiana's 1979 ban on the grant of exclusive territories to beer wholesalers. Using time-series data for 1948–1990 we find the ban reduced beer consumption in Indiana by 6 percent. Coupled with previous evidence that Indiana's ban reduced price, our results suggest that exclusive territories in the beer industry increase demand and enhance welfare by stimulating the provision of dealer services.     

Heavy episodic drinking and college entrance

The college environment appears to encourage heavy drinking. Consequently, correlates of student drinking were assessed at college entrance. First-semester freshmen (N = 520, 54 percent women) completed self-report measures of social affiliation and self/peer drinking for high school and college. Analyses indicated that: 1) increased drinking at college entrance mirrored perceived increases by peers, 2) perceptions of peer drinking were robustly overestimated with women displaying the larger overestimation bias; and 3) social affiliation was associated with men's drinking and moderated its relation to perceived peer drinking at college entrance. These results advance understanding of the manner in which heavy drinking patterns emerge as men and women enter college, and campus programs that consider these factors may better promote health and reduce the harms associated with heavy drinking among college students.     

The impact of deferring retirement age on retirement income adequacy

UPDATE OF RSPM-POST-65 RETIREMENT AGES: The EBRI Retirement Security Projection Model (RSPM) was developed in 2003 to provide an assessment of national retirement income prospects. The 2011 version of RSPM adds a new feature that allows households to defer retirement age past age 65 in an attempt to determine whether retirement age deferral is indeed sufficiently valuable to mitigate retirement income adequacy problems for most households (assuming the worker is physically able to continue working and that there continues to be a suitable demand for his or her skills). The answer, unfortunately, is not always "yes," even if retirement age is deferred into the 80s. LOWEST-INCOME LEVELS, 50-50 CHANCE OF ADEQUACY: RSPM baseline results indicate that the lowest preretirement income quartile would need to defer retirement age to 84 before 90 percent of the households would have a 50 percent probability of success. Although a significant portion of the improvement takes place in the first four years after age 65, the improvement tends to level off in the early 70s before picking up in the late 70s and early 80s. Households in higher preretirement income quartiles start at a much higher level, and therefore have less improvement in terms of additional households reaching a 50 percent success rate as retirement age is deferred for these households. LOWEST-INCOME LEVELS, HIGHER CHANCES OF ADEQUACY: If the success rate is moved to a threshold of 70 percent, only 2 out of 5 households in the lowest-income quartile will attain retirement income adequacy even if they defer retirement age to 84. Increasing the threshold to 80 percent reduces the number of lowest preretirement income quartile households that can satisfy this standard at a retirement age of 84 to approximately 1 out of 7. IMPORTANCE OF DEFINED CONTRIBUTION RETIREMENT PLANS: One of the factors that makes a major difference in the percentage of households satisfying the retirement income adequacy thresholds at any retirement age is whether the worker is still participating in a defined contribution plan after age 65. This factor results in at least a 10 percentage point difference in the majority of the retirement age/income combinations investigated. FACTORING IN RETIREMENT HEALTH COSTS: Another factor that has a tremendous impact on the value of deferring retirement age is whether stochastic post-retirement health care costs are excluded (or the stochastic nature is ignored). For the lowest preretirement income quartile, the value of deferral (in terms of percentage of additional households that will meet the threshold by deferring retirement age from 65 to 84) decreases from 16.0 percent to 3.8 percent by excluding these costs. The highest preretirement income quartile experiences a similar decrease, from 12.8 percent to 2.6 percent.     

Heavy drinking on college campuses: no reason to change minimum legal drinking age of 21

The recent Amethyst Initiative argues that a minimum legal drinking age (MLDA) of 21 has created a culture of heavy alcohol use on college campuses by making drinking clandestine and extreme. This group and others argue that lowering the MLDA will reduce the problem of "binge drinking" on college campuses. However, such a policy change would remove one of the most researched and supported policies in the nation's alcohol control arsenal. There is little evidence that other interventions or policies are capable of working on the same broad level as MLDA 21, and there could also be a deleterious ripple effect in related legislation because MLDA 21 works in conjunction with other drinking laws. In addition, historic and international experiences with a lowered MLDA indicate there are serious social and public health consequences. Instead of removing efficacious interventions, we must remain committed to implementing and enforcing evidence-based practices and legislation.     

Medicare on life support: will it survive?

This Issue Brief discusses Medicare reform. The Balanced Budget Act of 1997 reduces spending in the Medicare program by $115 billion between 1998 and 2002. Most of the reduction in spending comes from reducing payments to providers, and most of the savings (36 percent) occur in 2002. By 2007, the Part A trust fund is expected to be insolvent, four years before the baby-boom generation reaches the current Medicare eligibility age of 65. Congress is likely to revisit Medicare reform in the near future. A number of reforms received a significant amount of attention during the Medicare reform debate, but were not included in the final legislation. The Senate-passed legislation would have increased the Medicare eligibility age from 65 to 67, imposed means testing on Medicare Part B, and imposed a Part B home health copayment of $5. While these provisions were not included in the Balanced Budget Act of 1997, they may be the focal point of future Medicare reform. Many changes to the Medicare program are likely to significantly affect employment-based health plans for both active and retired workers. Raising the Medicare eligibility age would undoubtedly affect both workers and retirees. Unless workers are willing to work until age 67, their likelihood of becoming uninsured would increase. In 1995, 15.8 percent of retirees ages 55-64 were uninsured, compared with 11.5 percent of workers in the same age group. Early retirees might also find themselves unable to afford health insurance in the private market. An Employee Benefit Research Institute/Gallup poll indicates a direct link between the availability of retiree health benefits and a worker's decision to retire early. In 1993, 61 percent of workers reported that they would not retire before becoming eligible for Medicare if their employer did not provide retiree health benefits. If workers responded to an increase in the retirement age by working longer, employment-based health plans would probably experience an increase in costs, because older workers are the most costly to cover. Some employers might respond to an increase in the Medicare eligibility age by dropping coverage altogether. The message for future beneficiaries is becoming very clear: expect less from Medicare at later ages and higher premiums. As was true prior to the enactment of Medicare in 1965, workers will increasingly need to include retiree health insurance as an expected expense as they plan and save for retirement.     

Heavy Drinking on College Campuses: No Reason to Change Minimum Legal Drinking Age of 21

Abstract

The recent Amethyst Initiative argues that a minimum legal drinking age (MLDA) of 21 has created a culture of heavy alcohol use on college campuses by making drinking clandestine and extreme. This group and others argue that lowering the MLDA will reduce the problem of “binge drinking” on college campuses. However, such a policy change would remove one of the most researched and supported policies in the nation's alcohol control arsenal. There is little evidence that other interventions or policies are capable of working on the same broad level as MLDA 21, and there could also be a deleterious ripple effect in related legislation because MLDA 21 works in conjunction with other drinking laws. In addition, historic and international experiences with a lowered MLDA indicate there are serious social and public health consequences. Instead of removing efficacious interventions, we must remain committed to implementing and enforcing evidence-based practices and legislation.     

Alcohol use trajectories and problem drinking over the course of adolescence: a study of north american indigenous youth and their caretakers

This study investigated the links between alcohol use trajectories and problem drinking (Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition abuse/dependence) using five waves of data from 727 North American Indigenous adolescents between 10 and 17 years from eight reservations sharing a common language and culture. Growth mixture models linking fundamental causes, social stressors, support, and psychosocial pathways to problem drinking via alcohol use trajectories over the early life course were estimated. Results indicated that 20 percent of the adolescents began drinking at 11 to 12 years of age and that another 20 percent began drinking shortly thereafter. These early drinkers were at greatly elevated risk for problem drinking, as were those who began drinking at age 13. The etiological analysis revealed that stressors (e.g., perceived discrimination) directly and indirectly influenced early and problem alcohol use by decreasing positive school attitudes while increasing feelings of anger and perceived delinquent friendships. Girls were found to be at risk independently of these other factors.     

Challenging the collegiate rite of passage: a campus-wide social marketing media campaign to reduce binge drinking

A social marketing media campaign, based on a normative social influence model and focused on normative messages regarding binge drinking, on a large, southwestern university campus has yielded positive preliminary results of an overall 29.2 percent decrease in binge drinking rates over a three-year period. The Core Alcohol and Drug Survey and the Health Enhancement Survey provided information on student knowledge, perceptions, and behaviors regarding alcohol and binge drinking. This study represents the first in-depth research on the impact of a media approach, based on a normative social influence model, to reduce binge drinking on a large university campus and has yielded promising initial results.     

NEW ESTIMATES OF THE OPTIMAL TAX ON ALCOHOL

In this paper I use a new data set to estimate the optimal alcohol tax rate. As a benchmark, the empirical results imply that the optimal tax rate is over 100 percent of the net-of-tax price. However, alcohol taxation is a second-best solution to the problems associated with alcohol abuse. I conclude that the optimal alcohol tax rate would be much lower if punishment for drunk driving were more certain and severe. Government provision of information about the health consequences of heavy drinking would also remove part of the efficiency rationale for alcohol taxes.     

University students' knowledge of alcoholic drinks and their perception of alcohol-related harm

A total of 371 university students were asked to estimate the amount of alcohol contained in a standard drink and to estimate the number of standard drinks contained in popular alcoholic beverages. In addition, students completed questionnaires assessing their perception of short and long term harm related to the consumption of beer, wine, spirits and pre-mixed alcopops. Results revealed that students were generally inaccurate in their estimate of alcoholic content of beverages, and national guidelines for low risk drinking. Students were also found to hold different perceptions regarding how harmful different alcoholic beverages were. While both male and female students considered spirits to be more harmful than beer, wine and pre-mixed drinks, males also believed beer to be more harmful than wine when considering the short term consequences. The pattern of beliefs reported by this sample suggest a high-risk population who are not aware of the risks they are exposing themselves to through their drinking behavior.     

Rural brewing,exclusion, and development policy-making

This article highlights the economic role of women in the brewing industry in rural and periurban areas of sub-Saharan African countries. Local beer drinking is a form of social exchange and a reward for time-intensive work. Modern beer brewing in rural areas is a family operation. Beer is produced for subsistence and for sale. Locally brewed beer has a lower alcohol content than commercial brews. The author refers to Pradervand's (1990) study of local brewing in five east and west African countries. Pradervand found that men spent an estimated CFAF 18 billion per year on local brews compared to the value of total national exports of CFAF 21 billion per year in 1996. The male Kitui in rural Kenya were found to spend 60% of their weekly income on beer. Women dominate brewing in eastern and southern Africa. Rural beers are grain based (maize, millet, or sorghum), but may also be made from bananas, bamboo, sugar cane, or coconut. An estimated 25% of women in a village survey in Tanzania reported that beer was brewed one to four times a month. Another survey in the 1980s found that 73% of women brewed beer at some time. Beer brewing is a very significant economic activity for rural women. It provides higher levels of income and employment. Urban brewing by women has a negative image that rural women's beer brewing does not have. Grain for brewing comes from family farms or markets. Women's clubs are used as income generation groups for loans and as support groups. Women's beer brewing is not supported by development interventions or recognized by UN agencies. There are resource implications due to an estimated 5%-30% of annual wood consumption used for beer brewing. If women's role in beer brewing is ignored, male-dominated commercial interests will further marginalize rural women.     

The impact of the minimum wage in West Virginia: A test of the low-wage-area theory

VI. Conclusions West Virginia counties do provide evidence of significant dis-employment due to the minimum wage, a finding that supports the theory that low-wage areas are more susceptible to employment losses when the legislated minimum wage is increased. My results show that a 10 percent increase in the minimum wage will reduce total employment in the average West Virginia county by 1.1 percent. The most rural counties may also respond more severely, up to 1.4 percent for the same minimum wage change. I thank Clifford Hawley, Sudeshna Bandypadhyay, George Hammond, Stratford Douglass, Brian Cushing, Tom Garrett, Victor Claar, Gary Wagner, and an anonymous referee for helpful comments.     

Perceived parental approval of drinking and its impact on problem drinking behaviors among first-year college students

There is a paucity of research investigating the impact that parents may have on college drinking. In this study, the authors investigated the relationship between students' perceptions of parent approval of drinking and problem drinking occurrence. They conducted a Web-based survey of 265 first-year students living on campus during their second semester. The authors used logistic regression to examine the relationship between students' perceptions of their mothers' and fathers' attitudes toward their drinking, their mothers' and fathers' drinking habits, and problem drinking since they had begun college. Sixty-nine percent of respondents reported experiencing at least 1 drinking problem. Over one third of students perceived that their parents would approve of them drinking occasionally. Students perceiving more parental approval for their drinking were more likely to report at least 1 drinking problem. Student perceptions of parental approval of drinking warrant further investigation as a potentially mutable correlate of problem drinking.     

SOCIAL LEARNING THEORY AND ALCOHOL BEHAVIOR AMONG THE ELDERLY

Research directly testing Akers's social learning theory has been thus far confined to teenage drug, drinking, and smoking behavior. This study extends the application of social learning theory to older adults' alcohol behavior. Data were gathered through face-to-face interviews of 1,410 people sixty years of age or over living in New Jersey and Florida in either retirement (age homogeneous) or age-integrated communities. A social learning model of differential association, differential reinforcement, and definitions is supported by findings on elderly drinking behavior. As is true for younger age groups, drinking among the elderly is related to the norms and behavior of one's primary groups, one's own attitudes toward (definitions of) alcohol, and the balance of reinforcement for drinking.     

A post-crisis assessment of retirement income adequacy for Baby Boomers and Gen Xers

DETERMINING THOSE "AT RISK" OF INSUFFICIENT RETIREMENT INCOME: The analysis in this paper was designed to answer two questions: 1) What percentage of U.S. households became "at risk" of insufficient retirement income as a result of the financial market and real estate crisis in 2008 and 2009? 2) Of those who are at risk, what additional savings do they need to make each year until retirement age to make up for their losses from the crisis? The results are from the 2010 EBRI Retirement Security Projection Model by the Employee Benefit Research Institute. KEY FINDINGS: Range at risk: The percentage of households that would not have been "at risk" without the 2008-2009 crisis but that ended up "at risk" varies from a low of 3.8 percent to a high of 14.3 percent. 50-50 chance of adequacy: Looking at all Early Boomer households that would need to save an additional amount (over and above the savings already factored into the baseline model), the median percentage of additional compensation for these households desiring a 50 percent probability of retirement income adequacy would be 3.0 percent of compensation each year until retirement age to account for the financial and housing market crisis in 2008 and 2009. 90 percent chance of adequacy: Looking at all Early Boomer households that would need to save an additional amount (over and above the savings already factored into the baseline model), the median percentage of additional compensation for these households desiring a 90 percent probability of retirement income adequacy would be 4.3 percent of compensation. Range of adequacy: Looking only at Early Boomer households that would need to save an additional amount (over and above the savings already factored into the baseline model), that had account balances in defined contribution plans and IRAs as well as exposure to the real estate crisis in 2008 and 2009 shows a median percentage for of 5.6 percent for a 50 percent probability and 6.7 percent for a 90 percent probability of retirement income adequacy.