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Does State Monopolization of Alcohol Markets Save Lives?

July 21, 2011

This study examines how government control of liquor sales markets affects public health.

two tumblers with liquor and a lit cigarrette

This study, authored by Duquesne University economics professor John Pulito and associate economics professor Antony Davies, examines how government control of liquor sales markets affects public health.

Pultio and Davies write that failure to study the relationship between government command and control of the liquor market and traffic fatalities, leads to incorrect assumptions and poor policymaking.

“If the relationship between retail outlet density and alcohol consumption is not causal, or if it is causal, but the causality runs from consumption to density or is bidirectional, restrictions on outlet density will have no effect on alcohol consumption,” Pultio and Davies wrote. “Worse, as is the case with all social policies, implementing the policy may lead people to falsely believe that the government is judiciously spending its resources in pursuit of a valuable social goal, and to erroneously equate spending and regulation directed toward the goal with the achievement of the goal.”

Pultio and Davies write that, empirically speaking, state monopolies are correlated with elevated alcohol-related traffic fatality rates.

“This study utilizes a panel of 49 states from 1982 to 2002 in an attempt to measure the relationship between privatization of alcohol sales and alcohol-related traffic fatalities,” Pultio and Davies write. “Controlling for other alcohol-control policies, the bulk of our results confirm previous research showing no difference in fatality rates for control versus no control. Interestingly, by classifying control by degree, we find light control to be associated with significantly elevated DUI fatality rates both among adults and the underage.”

Antony Davies is associate professor of economics at Duquesne University and Mercatus Affiliated Senior Scholar at George Mason University. His primary research interests include econometrics and public policy.