Amethyst and Public Choice

5 October 2008 at 11:24 am 5 comments

| Dick Langlois |

Many of you have heard of the Amethyst Initiative, a petition signed (at this writing) by 130 American college and university presidents in favor of lowering the drinking age from 21 back down to 18. As the website puts it, prohibition is not working. The college presidents are hoping that, by removing the black-market character of college drinking in the U.S., lowering the drinking age might be part of a solution to the problem of binge drinking on campus. (Although American 18-year-olds may not buy alcohol because such an activity is unsafe and unhealthy, it is quite alright for the same 18-year-olds to join the military and be posted to Iraq or Afghanistan.) Needless to say, this proposal has generated an enormous amount of controversy, and is vociferously opposed by politically powerful groups like Mothers Against Drunk Driving. The authoritarian response, typified by this column in Slate, is to point to the many studies that show that a higher drinking age reduces driving fatalities, although the Slate article does come around at the very end to the point that economists would make: taxes are more efficient at regulating behavior than is prohibition. (This would also include binge drinking. A student of mine, recently returned from a semester abroad, reports that there is no binge drinking at the National University of Singapore despite a drinking age of 18 — not because of that government’s well-known authoritarianism but because alcohol is highly taxed.) Not, of course, that I would personally like to see higher taxes on my pinot grigio.

My point here is not to engage the debate but to raise a Public Choice point I haven’t seen raised elsewhere. A quick reading of the list of university presidents who have signed suggests that many of them are from private schools. Among the most prominent of these are Dartmouth, Duke, and Johns Hopkins. Public Choice theory might suggest that presidents of state universities are much less likely to sign, since they depend on politicians for funding, and are much less willing to take positions that groups like MADD would oppose. The president of my university is certainly not about to sign it. The six Connecticut schools that have signed are all private, including Trinity College but not including Connecticut College, Wesleyan, or Yale. (Of course, Rick Levin at Yale may be just as reluctant to take unpopular positions given the hungry eye the government has been casting at his endowment.) On the other hand, there are a number of public colleges among the signatories, notably Maryland, UMass, and Ohio State. Are the signatories really biased in favor of private schools? Or are people actually taking moral positions despite possible consequences? That would be interesting. Do we have enough data to tell? Might be an good project for someone talented in the relevant econometrics.

I hesitated at first to post this, since I didn’t see its relevance to the current financial crisis. On reflection, however, it occurred to me that there is an important connection, since the best possible response to the financial crisis might well be binge drinking.

Entry filed under: - Langlois -, Law and Economics, Public Policy / Political Economy.

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5 Comments Add your own

  • […] by claudio in Uncategorized. Tags: escolha pública, lei seca, public choice trackback Eis uma interessante reflexão. Para quem gosta de políticas públicas e álcool, este é um bom tema para se […]

  • 2. Rafe Champion  |  5 October 2008 at 6:25 pm

    Lowering the legal age of drinking will only legalize something that is happening all the time and the parallel step is to point out that accepting personal responsibiliy for our behaviour and its consequences beats both legal restrictions and taxation in generating good outcomes. The history of MADD is interesting, the original founder bailed out because it was taken over by zealots.

  • 3. Bertil  |  16 October 2008 at 11:30 am

    A solution might be to have a tax scheme that isn’t too bad on your Pinot Grigio, and significant for cheap Vodka. Sweden has rather expensive alcohol, but when you compare great wine, it’s actually surprisingly affordable — not that the results are geat (everyone p*ssed-drunk on Friday nights).

    An alcoholic content tax, with increasing rate by alcoholic ratio might do that, say:
    – ¢20/g for a light beer (0-5%) would make a small can (.33L, 3%, 1g) 20 cents more expensive;
    – ¢30/g for wine (5-18%) would make a bottle (.75L, 12%, 9g) $2.7 more expensive;
    – ¢50/g for liquor (18%-45%) would make a whisky bottle (1L, 40%, 40g) $20 more expensive.

    But maybe this will encourage students to get drunk with beer, gulping gallons at once and inducing kidney failure. . . MADD won’t like that either.

  • 4. Dick Langlois  |  16 October 2008 at 12:17 pm

    As it happens, an article called ”Free Lunch” by Philip Cook at Duke came across my screen not long before your comment appeared. Cook, who is apparently one of the world’s experts on alcohol taxation, argues that an across-the-board tax on alcohol (A) doesn’t have to be large to have effects and (B) is automatically targeted toward those who generate the most externalities (including the externality of ill-health in a socialized health-care system). This latter is so because 80% of the alcohol gets consumed by only 20% of the drinkers (13% of the population).

    Cook also claims — and this is the free lunch part — that the moderate drinkers are actually made better off by the tax, since the revenue the tax generates could be used to lower other taxes or provide additional valuable government services that the moderate drinkers would value. Of course, readers of this blog are well aware that, empirically, the former never happens (hasn’t Peter blogged about this?), and increased taxes always lead to increased spending, arguably on less-than-obviously beneficial things. Cook also seem to believe that most of us are “under the influence [sic] of false lessons from national Prohibition.” By this he means that Public Health types believe that Prohibition did reduce alcohol consumption and related health and safety internalities and externalities, and thus was a good thing. In fact, of course, we believers in the “conventional wisdom” are well aware that Prohibition reduced overall alcohol consumption; it’s just that we also believe that the externalities Prohibition created (cf. every period gangster movie ever made) far outweighed any benefits, even as calculated in narrow Public Health terms.

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    Amethyst and Public Choice | Organizations and Markets

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