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The Impact of Alcohol Pricing and Promotional Activities on High-Risk Drinking

Literature Review
The research literature finds that preventing the time-limited discounting of alcohol results in less drinking overall. Less drinking, in turn, can help reduce alcohol-related public health and safety problems that impact our entire community. Several studies demonstrate that alcohol consumption, even by the heaviest drinkers, declines as the price of alcohol increases (Cook and Tauchen 1982, Cook and Moore 1993, Cook 1981, Grossman et al. 1994, Grossman and Markowitz 1998). In addition, a recent study (Grossman and Markowitz 1998) estimates that raising the price of beer by 10% would have a dramatic impact on college students' violent behavior, including a:

  • 4.5% drop in the rate at which students get into trouble with the police, residence hall, or other college authorities
  • 5.5% drop in the rate at which students damage property
  • 3.4% drop in the rate at which students get into arguments or fight
  • 3.6% drop in the rate at which students take advantage of another person sexually or are taken advantage of sexually

Density is also related to the price of alcohol and consumption levels. Where alcohol is more readily available, such as areas with greater outlet density, more drinking usually occurs (Gruenewald et al. 1993) and there is a greater likelihood that situations of negative behavior will arise. Moreover, the level of drinking and participation in binge drinking are all significantly higher among college students when a greater number of outlets licensed to sell alcoholic beverages exist near campus (Chaloupka and Weschler 1996).

Downtown redevelopment is rapidly evolving and it typically begins with dining, alcohol, and entertainment establishments. Often, this leads to a high concentration of those types of businesses. Part of the development and revitalization is to bring more people downtown. For this to be successful, it is necessary to establish retail diversity and promote the peaceful coexistence of downtown businesses and residents. There are few who would disagree that responsibly managed dining, alcohol, and entertainment establishments provide benefits to a community. They create jobs, increase taxes, are a public convenience, and support the development of other retail and entertainment businesses. However, inherent in the development of dining, alcohol, and entertainment businesses are issues that must be addressed:

  • Licensed Beverage Service: high-risk promotions, pricing, along with access and availability of alcohol, especially to underage and intoxicated persons, must be controlled.
  • Waste Management: an increase in trash, vomit, and vandalism often results from the excessive use of alcohol.
  • Noise and Disturbances: often interfere with residential neighbors and other businesses.
  • Safety: control risk factors to customers and neighbors including violence to person and property.
  • New Businesses: orient new business owners and mangers to their role and responsibility in the community.
  • Parking: must be sufficient and convenient.

States That Address Price Discounting of Alcohol

It is unlawful to “sell alcoholic beverages during a portion of the day at a price that is reduced from the usual, customary, or established price that the permittee charges during the remainder of that day.”

It is unlawful to “sell or offer to sell to any person or group of persons any drinks at a price less than the price regularly charged for such drinks during the same calendar week, except at private functions not open to the public.”

It is unlawful to “sell, offer to sell or serve any drink of alcoholic liquor to any person on any one date at a reduced price other than that charged other purchasers of drinks on that day where such reduced price is a promotion to encourage consumption of alcoholic liquor, except as authorized in paragraph (7) of subsection (c);”

It is unlawful to “offer or serve to any person a drink at a price that is less than the acquisition cost of the drink to the licensee or permit holder.”

It is unlawful to “sell, offer to sell or deliver to any person or group of persons any drinks at a price less than the price regularly charged for those drinks during the same calendar week, except at private functions not open to the public.”

Chaloupka, Frank and Henry Wechsler. Binge drinking in college: The impact of price availability and alcohol control policies. Contempory Economic Policy vol 14, October 1996.

Cook, Philip J. The effect of liquor taxes on drinking, cirrhosis, and auto accidents. Alcohol and public policy: beyond the shadow of Prohibition. Mark H. Moore and Dean R. Gerstein eds. Washington DC: National Academy Press. Pp. 255-285. 1981.

Cook, Philip J. and Michael J. Moore. Economic perspectives on reducing alcohol-related violence. Alcohol and Interpersonal Violence: Fostering Multidisciplinary Perspectives. Research Monograph 24. NIAAA. 1993. pp. 193-212.

Cook, Philip J. and George Tauchen. The effect of liquor taxes on heavy drinking. The Bell Journal of Economics (13)2:379-390. Autumn 1982.

Grossman, Michael, Frank J. Chaloupka, Henry Saffer, and Adit Laixuthai. Effects of alcohol price policy on youth: A summary of economic research. Journal of Research on Adolescence 4(2):347-364. 1994.

Grossman, Michael and Sara Markowitz. Alcohol regulation and violence on college campuses. Paper presented at the Allied Social Science Associations Annual Convention in Chicago IL, January 3-5, 1998.

Gruenewald, Paul J., Alex Millar, and Andrew Treno. Alcohol availability and the ecology of drinking behavior. Alcohol Health and Research World (17) 1:39-45, 1993.