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Breaking Bad in Bourbon Country: Does Alcohol Prohibition Encourage Methamphetamine Production?

41 Pages Posted: 26 Aug 2015 Last revised: 12 Dec 2016

Jose M. Fernandez

University of Louisville - Department of Economics; University of Louisville - College of Business and Public Administration

Stephan Gohmann

University of Louisville - College of Business - Department of Economics

Joshua C. Pinkston

University of Louisville

Date Written: November 17, 2016

Abstract

This paper examines the influence of local alcohol prohibition on the prevalence of methamphetamine labs. Using multiple sources of data for counties in Kentucky, we compare various measures of meth manufacturing in wet, moist, and dry counties. Our preferred estimates address the endogeneity of local alcohol policies by exploiting differences in counties’ religious compositions between the 1930s, when most local-option votes took place, and recent years. Even controlling for current religious affiliations, religious composition following the end of national Prohibition strongly predicts current alcohol restrictions. We carefully examine the validity of our identifying assumptions, and consider identification under alternative assumptions. Our results suggest that the number of meth lab seizures in Kentucky would decrease by 34.5 percent if all counties became wet.

Keywords: Alcohol prohibition, methamphetamine production, dry counties

JEL Classification: K42, I1, K32

Suggested Citation

Fernandez, Jose M. and Gohmann, Stephan and Pinkston, Joshua C., Breaking Bad in Bourbon Country: Does Alcohol Prohibition Encourage Methamphetamine Production? (November 17, 2016). Available at SSRN: https://ssrn.com/abstract=2650484 or http://dx.doi.org/10.2139/ssrn.2650484

Jose M. Fernandez

University of Louisville - Department of Economics ( email )

Louisville, KY 40292
United States
(502) 852-4861 (Phone)

HOME PAGE: http://louisville.edu/~jmfern02/

University of Louisville - College of Business and Public Administration ( email )

Louisville, KY 40292
United States

Stephan Gohmann

University of Louisville - College of Business - Department of Economics ( email )

Louisville, KY 40292
United States

Joshua C. Pinkston (Contact Author)

University of Louisville ( email )

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