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Health Benefits of Increases in Alcohol and Cigarette Taxes

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  • Michael Grossman

Abstract

Health taxes on alcohol and cigarettes imposed by the Federal government of the United States have been very stable since 1951. This paper summarizes research that shows that increased taxation, which results in higher prices, would discourage alcohol abuse and cigarette smoking. One striking finding is that a policy to raise the Federal excise tax on beer in line with the rate of inflation over the last three decades would cut motor vehicle fatalities of 18 to 20 year olds, many of which are alcohol-related, by about 15 percent, saving more than 1,000 lives per year. A second is that over 800,000 premature deaths in the cohort of Americans 12 years and older in 1984 would be averted if the Federal excise tax on cigarettes were restored to its real value in 1951.

Suggested Citation

  • Michael Grossman, 1989. "Health Benefits of Increases in Alcohol and Cigarette Taxes," NBER Working Papers 3082, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:3082
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    Cited by:

    1. Michael Grossman, 1993. "Policy Watch: Alcohol and Cigarette Taxes," Journal of Economic Perspectives, American Economic Association, vol. 7(4), pages 211-222, Fall.
    2. Mullahy, John & Sindelar, Jody, 1996. "Employment, unemployment, and problem drinking," Journal of Health Economics, Elsevier, vol. 15(4), pages 409-434, August.
    3. Moore Michael J. & Hughes James W., 2001. "The Health Care Consequences of Smoking and Its Regulation," Forum for Health Economics & Policy, De Gruyter, vol. 4(1), pages 1-48, January.
    4. Tetsuji Yamada & Michael Kendix & Tadashi Yamada, 1996. "The impact of alcohol consumption and marijuana use on high school graduation," Health Economics, John Wiley & Sons, Ltd., vol. 5(1), pages 77-92, January.
    5. Jose M. Labeaga, 1993. "Individual behaviour and tobacco consumption: A panel data approach," Health Economics, John Wiley & Sons, Ltd., vol. 2(2), pages 103-112, July.
    6. Chesson, Harrell & Harrison, Paul & Kassler, William J, 2000. "Sex Under the Influence: The Effect of Alcohol Policy on Sexually Transmitted Disease Rates in the United States," Journal of Law and Economics, University of Chicago Press, vol. 43(1), pages 215-238, April.
    7. Tetsuji Yamada & Michael Kendix & Tadashi Yamada, 1993. "The Impact of Alcohol Consumption and Marijuana Use on High School Graduation," NBER Working Papers 4497, National Bureau of Economic Research, Inc.

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