Running head: ALCOHOL TAXATION AND THE IMPACT ON TREATMENT

Common government policy towards curbing unhealthy alcohol drinking behavior is to raise taxes thereby lowering consumption. This study examines how alcohol excise taxes (beer, spirits and wine) affect the number of individuals being treated for alcoholism in state facilities as well as effects on consumption on the state and regional levels in the United States. State-level data for the 50 states and the District of Columbia was drawn from 5 data sources and information on demographics, alcohol consumption and taxation was analyzed using OLS regressions. Individual regressions of each type of alcohol consumed were first run to check the predicting power of taxes relative to consumption. Then the main regressions for reported total treatment admissions showed statistically significant demographic, tax and regional effects. The sample was also divided into two types of admissions: those who suffered singularly from alcohol abuse and those who had an alcohol and drug abuse problem. Findings indicate increasing state beer taxes will reduce the number of admissions receiving alcohol treatment, but that, for alcohol, taxes pale in comparison to beverage price in predicting consumption patterns. The implications from the results of this study provide evidence of the general effectiveness of state taxation in deterring dangerous consumption behavior as well as the implied effectiveness of said excise taxes in curbing the amount of individuals requiring treatment leading to improved public health.