The good, the bad, and the ugly of alcohol consumption and taxes.

Abstract

The new contribution in these pages by Lhachimi et al. (2012) tallies up the net effects on mortality from internal and external causes that are likely to derive from changes in alcohol taxes in 11 countries within the European Union. Health economists prefer the efficiency of taxes to quotas or outright prohibition, but there are costs as well as benefits associated with any tax, because it drives a wedge between demanders and suppliers and thus reduces welfare. To guide public policy in this area, researchers should measure costs and benefits broadly defined, and Lhachimi et al. provide a useful first step.