Rachel Griffith, Martin O'Connell, Kate Smith, 21 March 2017

Governments have long used taxation to correct for the socially costly overconsumption of alcohol, but as the external cost of overconsumption varies across drinkers, a single tax rate is not optimal. This column argues that variation in preferences for different products and in price responsiveness across heavy and light drinkers provides scope to improve welfare by varying tax rates across alcohol products. The proposed framework is well suited to addressing other sources of external costs, such as obesity.

Sarah Lewis, Stephanie von Hinke Kessler Scholder, George Wehby, Luisa Zuccolo, 08 March 2014

Excessive drinking during pregnancy is known to harm the foetus, but estimating the effects of moderate prenatal alcohol consumption is difficult, since mothers who choose to drink may differ systematically from those who do not. This column presents recent research showing that a genetic variant in a maternal alcohol-metabolising gene (ADH1B) is negatively related to prenatal alcohol exposure, and unrelated to any of the background characteristics associated with prenatal drinking. Using this genetic variant as an ‘instrumental variable’, the authors find strong negative effects of prenatal alcohol exposure on child educational achievement.

Harald Tauchmann, Silja Göhlmann, Till Requate, Christoph Schmidt, 08 June 2008

Recent results based on a large German micro data set show that tobacco and alcohol are complements. Smoking bans are thus likely to reduce alcohol consumption too, but not by much. One cigarette less per day reduces drinking by 1% of a half-pint of beer. Smoke-free pubs are not in danger of becoming alcohol-free too.