Health Benefits of Increases in Alcohol and Cigarette Taxes

40 Pages Posted: 14 Apr 2007 Last revised: 10 Mar 2010

See all articles by Michael Grossman

Michael Grossman

National Bureau of Economic Research (NBER), NY Office; CUNY The Graduate Center - Department of Economics

Date Written: August 1989

Abstract

Health taxes on alcohol and cigarettes imposed by the Federal government of the United States have been very stable since 1951. This paper summarizes research that shows that increased taxation, which results in higher prices, would discourage alcohol abuse and cigarette smoking. One striking finding is that a policy to raise the Federal excise tax on beer in line with the rate of inflation over the last three decades would cut motor vehicle fatalities of 18 to 20 year olds, many of which are alcohol-related, by about 15 percent, saving more than 1,000 lives per year. A second is that over 800,000 premature deaths in the cohort of Americans 12 years and older in 1984 would be averted if the Federal excise tax on cigarettes were restored to its real value in 1951.

Suggested Citation

Grossman, Michael, Health Benefits of Increases in Alcohol and Cigarette Taxes (August 1989). NBER Working Paper No. w3082. Available at SSRN: https://ssrn.com/abstract=980217

Michael Grossman (Contact Author)

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