Alcohol consumption externalities: An impact of alcohol policies on crime rates

Abstract

Alcohol is traditionally considered by economists as an addictive good. Its consumption is often connected to irrational behaviours as well as negative external effects: growth of crime rates, traffic, occupational, and home accidents, fires. That is why most countries with high levels of alcohol consumption introduce special policy measures to reduce it and, as a result, its negative impact on society. In recent decade these policies were also adopted in Russia. This paper analyzes an impact of alcohol policy measures on crime rates. Empirical study is based on econometric analysis of panel data on Russian regions in 2003-2015. The results confirm effectiveness of temporal restrictions on alcohol sales in regard to juvenile and adult crime. Increasing price of vodka due to higher rates of excise tax reduces a number of crimes by teenagers. Meanwhile, price measures do not influence crime rates among adults.