Pigovian taxes salve lives

New inquiry via the NBER:

On Jan 1, 1991, the federal excise taxation on beer doubled, in addition to the taxation rates on vino in addition to liquor increased every bit well. These changes are larger than the typical state-level changes that bring been used to report the effect of cost on alcohol abuse in addition to its consequences. In this paper, nosotros educate a method to approximate about of import effects of those large 1991 changes, exploiting the interstate differences inward alcohol consumption. We demonstrate that the relative importance of drinking inward traffic fatalities is closely tied to per capita alcohol consumption across states. As a result, nosotros hold off that the proportional effects of the federal taxation increment on traffic fatalities would live positively correlated alongside per capita consumption. We demonstrate that this is indeed the case, in addition to infer estimates of the cost elasticity in addition to lives saved inward each state. We repeat this practice for other injury-fatality rates, in addition to for ix categories of crime. For each outcome, the estimated effect of the taxation increment is negatively related to average consumption, in addition to that human relationship is highly meaning for the overall injury larn out rate, the fierce criminal offense rate, in addition to the holding criminal offense rate. A conservative approximate is that the federal taxation reduced injury deaths yesteryear 4.7%, or nigh 7,000, inward 1991.

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