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The impact of alcohol taxation on liver cirrhosis mortality *.

Article Excerpt
THIS ARTICLE PRESENTS EVIDENCE concerning the role of alcohol taxation in the determination of aggregate mortality rates due to cirrhosis of the liver. Numerous studies have demonstrated that alcohol taxes or prices affect total alcohol consumption (this literature is reviewed by Osterberg, 1995) and that aggregate alcohol consumption affects cirrhosis mortality rates (e.g., Gruenewald and Ponicki, 1995; Ramstedt, 2001; Schmidt, 1977; Smart and Mann, 1987). However, other evidence suggests that the heavy drinkers who are most at risk for cirrhosis may be less responsive to price than are other drinkers (e.g., Manning et al., 1995; Stout et al., 2000).

A smaller number of studies have explicitly examined the impact of alcohol taxes or prices on cirrhosis rates using aggregate-level data. Cook (1981) showed that tax hikes on distilled spirits had a significant impact on cirrhosis mortality in 30 U.S. license states using a "quasi-experimental" approach, but this study's findings may not be reliable because of a lack of controls for tax and price changes in "comparison" states. Cook and Tauchen (1982) used more appropriate panel regression methods to analyze cirrhosis mortality for the same 30 license states during the period 1972-1977. This study's fixed-effects specifications mitigate excluded-variable bias by employing state and year dummy variables to control for unexplained cross-sectional and time-series variation in sentiments toward alcohol, which affect both tax levels and alcohol use. Using this fixed-effects approach, Cook and Tauchen (1982) found that higher taxes on distilled spirits were associated with significant reductions in cirrhosis mortality rates. This issue has been investigated by more recent studies but with inconsistent findings. Saffer (1991) and Young (1993), using the same 1970-1983 panel data for 17 European countries, found that average alcohol prices had a significant negative impact on cirrhosis death rates. Studies using U.S. state-level panel data, however, failed to find significant impact of taxes or prices on cirrhosis mortality rates in models incorporating both state and year dummy variables (Grossman, 1993; Heien and Pompelli, 1987; Sloan et al., 1994). Of these U.S. studies, the first two included no control variables other than price and income in their fixed-effects specifications, whereas the third covered a short span of years (1982-1988) and included covariates primarily related to prevention of driving under the influence. The current study contributes to this literature by using a longer, more recent period, adding relevant covariates to lessen the risk of excluded-variable bias, improving statistical efficiency through the use of random-effects models, and introducing corrections to reduce the impact of heteroscedasticity and autocorrelated residuals.

Method

The analyses here extend those of Cook and Tauchen (1982) using data from the same 30 U.S. license states included in that study. The current analyses cover the period 1971-1998, compared with the 1962-1977 data set used in the earlier study. The archival data were drawn from a database developed by Ponicki (2004), which includes detailed citations of data sources. The dependent variable in all models is cirrhosis deaths per 1,000 residents ages 15 and older (National Center for Health Statistics, 1985, 2000, 2003). Cirrhosis deaths are defined by underlying cause of death codes 571.0-571.9 from the eighth (1971-1978) and ninth (1979-1998) revisions of the International Classification of Diseases (World Health Organization, 1967; Puckett, 1991). Cirrhosis mortality is included regardless of specific mention of alcohol, because alcohol attribution may vary by place or time and because deaths coded as nonalcoholic have been shown to be significantly associated with alcohol consumption (Ramstedt, 2003)....

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