The High Cost of Cheap Alcohol

Each year, alcohol claims 79,000 lives. It is the third-leading lifestyle-related cause of death. In 2005, 1.6 million hospitalizations and 4 million emergency room visits occurred, thanks to alcohol. To put these figures in perspective, almost 6,000 military personnel have lost their lives in the Iraq and Afghanistan wars, and an estimated 3,000 people die each year from food-borne illness.

Alcohol is related to crime, disease and other social problems. It threatens to rob the potential of our youth who continue to drink at high levels. Problems with alcohol touch many Americans. When asked in a Gallup poll, “Has drinking ever been a cause of trouble in your family?” 31 percent said, “Yes.”

Clearly the cost of alcohol misuse is very high. This suggests we need to do whatever we can to minimize the devastating impact the figures imply. A substantial body of research points to the effectiveness of restricting “affordability, availability and accessibility.”

But regulations that embody these principles are being eroded as alcohol price policies are changed, alcohol outlets are allowed to sell more types of products, hours and days of sale are increased, and the total number of alcohol outlets is increased beyond the need for population growth. Eroding these policies is often sold to the public on the basis of increasing tax revenue and improving customer convenience. However, the only way this would work is if a lot more people buy and drink a lot more alcohol. While surveys usually find public support for alcohol policies to be high, the public doesn’t always understand the impact of changes to single regulations.

This report is designed to educate the public about the alcohol regulatory system and how it works. It focuses on one of the most powerful tools available to control alcohol problems: price. Time and again, research has shown that when prices go up, alcohol consumption and its attendant social problems go down. To be effective, pricing policies must impact the entire marketplace and be related to availability. The reason is that cheap alcohol is primarily a problem when large quantities of inexpensive products flood the marketplace; a few cheap bottles in a remote location do not lead to overall social harm. Our regulatory systems were originally designed with great care by people who knew the dangers of an unregulated marketplace.

For easy reading, the report will answer these questions in separate sections:

• What did Prohibition teach us?
• What Happened When Alcohol Became Legal Again?
• How Did the Current Three-Tiered Regulatory System Change America’s Drinking Habits?
• What Has the Balanced Alcohol Marketplace Accomplished So Far?
• What Happens When Regulations Are Relaxed?
• How Has Globalization Affected Alcohol Use?
• What Dangers Lie Ahead?

Click to download the PDF report: The High Cost of Cheap Alcohol