Tiziano Arduini, Alberto Bisin, Onur Ozgur, Eleonora Patacchini, 27 November 2019

Smoking and alcohol use are widespread among adolescents in the US and are linked to negative socioeconomic effects.While existing research has separately looked at the dynamic choice and the social interactions that shape adolescent risky behaviours, this column considers both components in a dynamic social interactions model. Looking at alcohol and smoking use in a school environment, it finds that addiction and peer effects are more than twice as important as the effect of individual preferences in shaping risky behaviour and that students take into account the amount of time they have left in the school system.

Jean Hindriks, Valerio Serse, 19 April 2019

Alcohol tax pass-through can vary substantially across products, but it also depends on the location of stores. This column examines retail prices of six major brands of spirits in Belgium after a tax reform, and finds evidence that the impact on prices varied across regions. These variations depended on the intensity of local competition and, to a lesser extent, proximity to national borders. 

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.

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