Causal Effects of Alcohol Consumption on Health-related Consequences: Evidence from Finland

33 Pages Posted: 13 Apr 2022

See all articles by Sumit Agarwal

Sumit Agarwal

National University of Singapore

Jussi Keppo

National University of Singapore (NUS) - NUS Business School

Zhiwen Wang

Centre for Family and Population Research, National University of Singapore

Zoe Yang

The Chinese University of Hong Kong - CUHK Business School

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

Agarwal, Sumit and Keppo, Jussi and Wang, Zhiwen and Yang, Yang, Causal Effects of Alcohol Consumption on Health-related Consequences: Evidence from Finland (March 16, 2022). Available at SSRN: https://ssrn.com/abstract=4059147 or http://dx.doi.org/10.2139/ssrn.4059147

Sumit Agarwal

National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 117592
Singapore
8118 9025 (Phone)

HOME PAGE: http://www.ushakrisna.com

Jussi Keppo

National University of Singapore (NUS) - NUS Business School ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore

HOME PAGE: http://https://www.jussikeppo.com

Zhiwen Wang

Centre for Family and Population Research, National University of Singapore ( email )

Block AS7, Level 3, 5 Arts Link
Singapore, 117570
Singapore
98605702 (Phone)

Yang Yang (Contact Author)

The Chinese University of Hong Kong - CUHK Business School ( email )

7/F, Cheng Yu Tung Building
12 Chak Cheung Street, Hong Kong
Hong Kong
Hong Kong

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