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Raising the Tax on Beer Would Curb Drunk Drivers

October 28, 1986|MARTIN FELDSTEIN and KATHLEEN FELDSTEIN | Martin Feldstein is the former chairman of President Reagan's Council of Economic Advisers. His wife, Kathleen Feldstein, also is an economist

As parents of teen-agers, we are acutely aware of the risks associated with teen-age drinking and driving. The national figures are frightening. Young people are more than twice as likely as older drivers to be involved in fatal road accidents. Motor vehicle accidents are the leading cause of death among young people, and experts say that alcohol is involved in more than half of all these fatal accidents.

So we have some sympathy with the federal government's decision to intervene in an area traditionally controlled by the states. By manipulating the availability of federal highway funds, the government has been able to pressure states into changing their laws to raise the minimum drinking age to 21.

The federal financial pressure has raised the number of states with the 21-year minimum from 23 when the law was signed to 41 today.

The government's present approach to reducing alcohol-related accidents is seen by teen-agers as unfair and misdirected because it bans drinking by young people rather than focusing on the problem of drunk driving. They argue that tougher laws and better enforcement of existing laws for drivers of all ages who have been drinking would be more effective in preventing alcohol-related accidents.

The most serious problem with the 21-year-old minimum drinking age is that it tempts teen-agers to engage in illegal behavior and thus creates in their minds the idea that they can decide which criminal laws are to be obeyed and which are to be disregarded.

And how do you convince an 18-year-old that the law is reasonable when it says that she is old enough to decide who should be the next President of the United States but that she is not old enough to know whether she should have a drink? Any law that appears unfair and discriminatory is that much harder and more costly to enforce.

Although studies show that the higher minimum drinking age does reduce teen-age motor vehicle fatalities, there is a better and less costly way to obtain the same desirable goal without invading the states' usual jurisdiction and without criminalizing or demeaning our young people.

Recent research at the National Bureau of Economic Research by Michael Grossman and his associates found that raising the federal excise tax on beer can be more effective than the minimum drinking age in reducing teen-age traffic fatalities.

The tax on beer has been unchanged at $9 per 31-gallon barrel since the early 1950s even though the overall consumer price level is now four times higher. If the federal beer tax had kept up with the general rise in prices, the tax would now be about $37 a barrel. This would raise the price of beer by about 10 cents per 12-ounce can.

Grossman's studies found considerable sensitivity of consumption to tax-induced price increases, especially among those who drink at least four times per week. On the basis of this analysis, Grossman and his colleagues estimate that raising the tax on beer in line with the increase in prices over the last three decades would cut motor vehicle fatalities by about 15%, saving more than 1,000 lives a year.

By contrast, if the drinking age had been 21 in all states during the late 1970s, only about 500 lives a year would have been saved.

There is, of course, one further advantage to raising the tax on beer: It would raise additional revenue to help reduce the budget deficit. Bringing the tax on beer in line with the increase in prices since the beer tax was last adjusted would raise more than $4 billion a year.

Although it is generally correct to regard a tax increase as harmful but worth accepting because it is less harmful than continued budget deficits, the higher tax on beer would be socially useful as well as a source of additional revenue.

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