The Long-Run Effects of a Public Policy on Alcohol Tastes and Mortality
40 Pages Posted: 9 May 2016 Last revised: 2 Aug 2018
Date Written: July 25, 2018
We document the long-run effects of a large public policy which changed young consumers' tastes for different types of alcohol. We estimate the age profile of taste formation using the temporary prohibition period from 1985-87 which dramatically changed the relative supply of different alcoholic beverages in Russia and shifted young consumers' long-run preferences from hard to light drinks. We find similar effects when studying the large import shocks in the late 1990s on young consumers' tastes while older consumers' tastes remained largely unchanged. The resulting large cohort differences in current alcohol consumption shares explain a significant part of the recent decrease in male mortality. Policy simulations suggest that mortality will continue to decrease by another 23% over the next twenty years due to persistent effects on consumer tastes. Program impact evaluations that focus only on contemporaneous effects can therefore severely underestimate the total effect of such public policies which change preferences for goods.
Keywords: long-run policy effects, tastes, mortality, program evaluation
JEL Classification: D12, H31, I18, J18
Suggested Citation: Suggested Citation