The regulation of beer
Posted August 9, 2007on:
I realise that a lot of important economic figures were released today, however, I have found an issue more important than any amount of labour market data, the regulation of beer. Now, according to this article, most binge drinkers drink beer. So they think we can reduce binge drinking by taxing beer, and reducing availability late at night.
I think that they have ignored that fact that their are substitutes to beer, and that if someone wants to binge drink they will drink them instead. The reason I drink beer when I go on a bender is to minimise the damage the next day. If they banned beer from me I would drink Vodka, and that would cause significantly greater negative social externalities, and leave me with a worse hangover.
Having a tax on alcohol is a different story. If alcohol causes a negative social externality, tax it so that the social cost=the social benefit. However, taxing beer alone simply gives people the incentive to find other drinks, as those other drinks are more potent regulation is likely to worsen the social externality. Do you think the same argument holds for taxing cigarettes? When we tax cigarettes are we really giving people the incentive to move onto harder drugs instead?