In the last decade. the problems related to excessive alcohol consumption have increased dramatically in societies, both developed and developing. Worldwide, alcohol accounted for 2 million deaths in 1989. As levels of GNP per capita rise, third world populations age, and alcoholic beverages are more widely marketed and distributed in developing countries, levels of alcohol consumption can only be expected to increase. The impact of an increase in alcohol consumption extends beyond increasing levels of premature mortality, to include a myriad of secondary problems, ranging from child abuse to reduced worker productivity. Although the net impact of these problems is unknown, many countries have acknowledged the significant health, social, and economic costs they impose. This paper is an initial attempt to review the impact of these alcoholrelated problems and to promote the debate on the appropriate role of government in regulating alcohol consumption.
In designing policies to maximize social welfare it is clear that alcohol consumption and the related problems of premature mortality, morbidity, and the range of secondary effects need to be addressed. These problems are particularly salient, given that people in the age group 15-24 and members of the lower income groups are the most likely to experience problems related to intoxication. Because consumers of alcohol are typically ill-informed of the impact of their consumption and, moreover, that alcohol-related problems impose significant costs on society, government intervention is justified. The reliance on supply restrictions as an effective remedy to the myriad alcohol-related problems has eroded to give way to policy instruments which target the demand for alcohol; these range from the more obvious, information campaigns, to raising prices and imposing bans on advertising. Although the impact of information campaigns on alcohol consumption has not been quantified, there is evidence that countries with bans on advertising have lower levels of consumption and about 10 percent fewer deaths due to a decline in the number of motor vehicle accidents. Moreover, empirical evidence shows that raising liquor prices can significantly reduce ethanol consumption and subsequently lower alcohol-related mortality. Liquor taxation, therefore, can justifiably be viewed as an effective policy instrument in the public health area.
At a time when most countries are trying to foster the development of human capital through investments in education and health, alcohol-related problems impose an increasingly heavy burden. And while the causality between alcohol consumption and alcohol-related problems is less than clear, the number of problems and deaths attributable to alcohol consumption will I surely rise if governments do not begin to implement balanced, preventive policies to mitigate the impact of these problems. Until now, low levels of income and minimal access to beverage markets precluded developing countries from developing high levels of alcohol consumption. As these trends are reversed, the economic and social costs associated with increasing levels of consumption may be inimical to national economic development.
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