Comment on “binge drinking and alcohol prices”

To the editors of health economics review: There is ample evidence on the effects of prices and taxes on heavy drinking, including binge drinking [1]. Experiments on “Happy Hour” discounts in barroom settings have shown that when the price of alcohol decreases, consumption increases, and vice versa [2, 3]. A well-cited meta-analysis of 112 studies (Wagenaar et al., [4]) identified ten studies on heavy drinking and estimated a significant elasticity of −0.28. Another systematic review by Elder and colleagues [5] concluded that alcohol tax levels were inversely associated with excessive drinking. This is consistent with the conclusion from a widely-cited review by Cook and Moore [6] that “an increase in price results in reduced consumption”, and this applies to drinking by youth, heavy drinkers, and alcoholics who develop cirrhosis due to chronic consumption. Xuan and colleagues [7] showed that an improved comprehensive measure of alcohol taxes including specific excise tax and value-based taxes resulted in more negative tax elasticity and price elasticity predicting binge drinking, as compared to a conventional measure that relies only on beer excise tax. Another meta-analysis by Wagenaar and colleagues [8] showed that increased taxes and prices were associated with reduced alcohol-related disease and injury outcomes that are attributable to binge drinking. Nevertheless, in an issue of Health Economics Review, Dr. Jon Nelson published a “systematic” review article with the following conclusion: “Increased alcohol taxes or prices are unlikely to be effective as a means to reduce binge drinking, regardless of gender or age group.” [9]. We have reviewed this paper based on its methodology, study interpretation, and conclusion.