Breaking Bad: Are Meth Labs Justified in Dry Counties?

This paper examines the influence of local alcohol prohibition on the prevalence of methamphetamine labs.  Specifically, we examine the effects of alcohol restrictions on meth lab seizures in Kentucky.  Gonzalez, Mooney, and Rawson (2010) report that meth use in the United States increased threefold between 1997 and 2007, and Kentucky has one of the highest rates of meth lab seizures in the country, with 15.24 labs seized per 100,000 residents between 2004 and 2008. 

Using multiple sources of data for counties in Kentucky, including meth lab seizures and local-option ordinances, we compare various measures of meth manufacturing in wet, moist, and dry counties.  We begin by controlling for observable heterogeneity between counties using OLS and propensity score matching.  We then address remaining endogeneity of local alcohol laws by exploiting variation in religious affiliations in the 1930’s when most local-option votes took place, that is not explained by current religious affiliation.  

Our preferred estimates address the endogeneity of local alcohol policies by using religious affiliations in the 1930s, when most local-option votes took place, as instrumental variables. Even controlling for current religious affiliations, alcohol prohibition status is influenced by the percentage of the population that was Baptist following the end of national Prohibition. Our results suggest that the number of meth lab seizures in Kentucky would decrease by 24.4 percent if all counties became wet.