Alcohol Prohibition and Addictive Consumption in India

This paper examines the effects of alcohol prohibition on the consumption of alcohol and other addictive goods. Using a series of household expenditure surveys for India, it finds that alcohol prohibition had differential effects on alcohol consumption by alcohol type and sector. In particular prohibition reduced consumption of arrack, IMFL, and beer in both urban and rural sectors, although its impact on the rural sector was lower. In addition, prohibition reduced toddy consumption in urban households. The relationship between alcohol and other addictive goods is also examined using prohibition as an instrument for alcohol consumption. The results suggest significant associations between alcohol and these items with the direction of the relationship differing by alcohol type. Consequently prohibition also had spill-over effects on the consumption of these items and is associated with an increase in bidi and cigarette consumption and a decrease in leaf tobacco and pan consumption. Acknowledgements: I would like to thank my supervisor Timothy Besley, Robin Burgess, Markus Goldstein, Rohini Pande, Imran Rasul and seminar participants at the EOPP PhD Student Seminar, EUDN Autumn Workshop, and Public Economics Working Group Meeting for guidance and helpful comments. All errors remain my own.