State Alcohol Policies and Youths' Use of the Social Market for Alcohol

According to the 2011 Center for Disease Control’s Youth Risk Behavioral Surveillance Survey, 38.7% percent of high school students nationwide drank alcohol.  Most of these teenagers received alcohol not via direct purchase, but through the social market.  For instance, among drinkers, 40% obtained alcohol by someone else giving it to them.  A number of studies have found that younger teenagers obtain their alcohol from secondary sources, such as a parent’s stock or from older siblings or friends over the age of 21 (Hearst et al., 2007; Wagenaar et al., 1994).  Despite youths’ reliance on the informal social market for alcohol, very little is known about the impact of public policies designed to curb drinking on youths’ use of the social market for cigarettes.

Considered a major public health problem, alcohol is the most commonly used and abused drug among youth in the United States.  Major policy interventions have been initiated throughout the years in an attempt to curb alcohol consumption by youths, such as nationwide increases in the Minimum Legal Drinking Age (MLDA), Zero Tolerance laws, and excise taxes on beer.  Evidence regarding changes in the beer excise tax and its effect on youth drinking is mixed.  Early studies relying on cross-state variation in beer taxes for identification consistently found that higher beer taxes or prices were negatively related to youth drinking (Grossman et al., 1987, 1994; Coate and Grossman, 1988; Kenkel, 1993; Cook and Moore, 1994).  However, when relying on within-state variation in taxes, Dee (1999) found that beer taxes had a relatively small and statistically insignificant effect on teen drinking.  This could suggest that the first generation of beer tax studies could have produced upwardly biased estimates due to difficult-to-measure state anti-drinking sentiment.  Recently, however, Carpenter et al. (2007) used data from the Monitoring the Future Survey—and exploited new within-state variation in beer taxes in the 1990s and early 2000s and found that beer taxes reduced teen drinking participation.

Recent work by Hansen, Rees, and Sabia (Forthcoming) suggest that the social market for cigarettes may be a mechanism through which younger teenagers are insulated from the effects of higher cigarette taxes.  But no study has yet explored how sin taxes—such as beer taxes, liquor taxes, and cigarette taxes—and anti-drinking policies affect how youths use the social market for alcohol.  Using data drawn from the national and state YRBS from 1991 to 2011—when 18 states increased their excises tax on beer—and a difference-in-difference approach , this study estimates the effect of alcohol policies on (i) underage drinking, (ii) youths’ use of the social market for alcohol, and (iii) alcohol-induced risky sexual behaviors.