What’s the impact of raising the drinking age to 21?

I’m distracted by other things today, but couldn’t resist the PM’s call for evidence on the costs and benefits of raising the Australian minimum drinking age from 18 to 21. Here are 3 possibly relevant economics papers.

Does the Minimum Legal Drinking Age Save Lives?
Jeffrey A. Miron, Elina Tetelbaum
The minimum legal drinking age (MLDA) is widely believed to save lives by reducing traffic fatalities among underage drivers. Further, the Federal Uniform Drinking Age Act, which pressured all states to adopt an MLDA of 21, is regarded as having contributed enormously to this life saving effect. This paper challenges both claims. State-level panel data for the past 30 years show that any nationwide impact of the MLDA is driven by states that increased their MLDA prior to any inducement from the federal government. Even in early adopting states, the impact of the MLDA did not persist much past the year of adoption. The MLDA appears to have only a minor impact on teen drinking.

Long Term Effects of Minimum Legal Drinking Age Laws on Adult Alcohol Use and Driving Fatalities
Robert Kaestner, Benjamin Yarnoff
We examine whether adult alcohol consumption and traffic fatalities are associated with the legal drinking environment when a person was between the ages of 18 and 20. We find that moving from an environment in which a person was never allowed to drink legally to one in which a person could always drink legally was associated with a 20 to 30 percent increase in alcohol consumption and a ten percent increase in fatal accidents for adult males. There were no statistically significant or practically important associations between the legal drinking environment when young and adult female alcohol consumption and driving fatalities.

Alcohol and Marijuana Use Among College Students: Economic Complements or Substitutes?
Jenny Williams, Rosalie Liccardo Pacula, Frank J. Chaloupka, Henry Wechsler
College campuses have been cracking down on underage and binge drinking in light of recent highly publicized student deaths. Although there is evidence showing that stricter college alcohol policies have been effective at discouraging both drinking in general and frequent binge drinking on college campuses, recent evidence from the Harvard School Of Public Health College Alcohol Study (CAS) shows that marijuana use among college students rose 22 percent between 1993 and 1999. Are current policies aimed at reducing alcohol consumption inadvertently encouraging marijuana use? This paper begins to address this question by investigating the relationship between the demands for alcohol and marijuana for college students using data from the 1993, 1997 and 1999 CAS. We find that alcohol and marijuana are economic complements and that policies that increase the full price of alcohol decrease participation in marijuana use.

Of course, the issue that we also need to consider are the magnitude of the benefits that young people gain from drinking (if you find this hard to swallow, pretend the proposal was to reduce road deaths by banning all drinking). I haven’t seen any good empirical evidence on this point, but it’s a critical one.

In the Australian context, Harry Clarke or Jenny Williams would be my go-to people if I was a journalist writing a story on this topic. Any other papers or experts that readers can suggest?

Update: Here’s Harry Clarke’s view on the issue.

(xposted @ Core Economics)

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One Response to What’s the impact of raising the drinking age to 21?

  1. Andrew,

    On the benefits side, our best estimate of the elasticity of youth alcohol consumption is -0.41. That, the average price of low-cost alcohol, and total quantity consumed gives you consumer surplus. See p.4 of my submission on New Zealand’s Law Commission’s proposed changes to liquor laws for the cites.

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