Causal Effects of Alcohol Consumption on Health-related Consequences: Evidence from Finland
33 Pages Posted: 13 Apr 2022
Date Written: March 16, 2022
Abstract
For thousands of years, the use of alcoholic beverages has been an intrinsic component of human culture. While existing research has documented the correlation between alcohol consumption and various health problems, the correlational evidence appears inconsistent and the causation has not yet been adequately demonstrated. This study provides new evidence on the causal impact of alcohol consumption on health by exploiting a plausible exogenous policy implemented in Finland in 1995, the deregulation of travelers' duty-free alcohol imports. After the deregulation, the surge in border crossings and alcohol imports resulted in a 12% increase in alcohol consumption nationwide. Based on the significant spatial heterogeneity in the impacts of the policy on alcohol consumption, domestic sales, and drunk driving cases, this study employs a difference-in-differences approach to compare medical expenditures on five major diseases in municipalities located close to border crossings than in those farther away. We find that the deregulation reduced the prevalence of diabetes by 0.11%, coronary heart disease by 1.01%, rheumatoid arthritis by 0.16% and hypertension by 0.138%, while the prevalence of epilepsy was not significantly affected. We also find the policy significantly reduces mental illness. As a consequence, the increase in alcohol consumption does not significantly affect different kinds of crimes. Our findings have significant implications for public policy debates on alcohol consumption and its potential impacts on health and society.
Note:
Funding Information: The study receives funding support from the Singapore Ministry of Education Academic Research Fund Tier 2 (MOE2016-T2-2-116).
Declaration of Interests: The authors declare no competing interest.
Keywords: Alcohol consumption, Diseases, Crimes, Cross-border shopping
JEL Classification: H7, I1,D1
Suggested Citation: Suggested Citation