Endogenous Alcohol Prohibition and Drunk Driving

Abstract

Public concern about alcohol abuse has stimulated a considerable amount of federal, state, and local legislation aimed at reducing alcohol consumption and alcohol-related behavior. An extensive empirical literature focuses on the impact of these policies on motor vehicle accidents, the leading cause of alcohol-related deaths. For example, studies suggest that increases in federal or state excise taxes on alcohol discourage heavy drinking and reduce motor vehicle fatalities [3; 6; 8; 11]. State-level legislation, such as minimum drinking age laws or preliminary-breath-test laws, has been shown to significantly lower motor vehicle fatalities [2; 13]. Although local legislation is examined less frequently in the literature, there is some evidence that county-level restrictions on alcohol sales lower the rate of alcohol-related motor vehicle fatalities. Saffer and Grossman [14; 15], Chaloupka, Saffer and Grossman [2], and Wilkinson [17] control for the proportion of a state's population residing in counties where alcohol sales are prohibited and find a negative impact on state-level motor vehicle fatality rates. Winn and Giacopassi [18] report that Kentucky counties which prohibit alcohol sales have significantly lower alcohol-related motor vehicle accident rates. Using county-level data on the state of Texas, Jewell and Brown [7] find that limitations in the number of licensed alcohol vendors could decrease alcohol-related motor vehicle accidents and fatalities.