Studies have found that a 10 percent increase in alcohol tax results in an average 3 to 4 percent drop in consumption. That’s quite impressive considering that the alcohol tax is generally quite low—only pennies on the gallon for beer in some states. In the case of cigarettes, for which the tax can exceed $2 per pack, a 10 percent tax increase could produce a consumption drop of up to 8 percent, according to an analysis by Nobel laureate Gary Becker and his colleagues. What’s more, these effects are heightened in groups that have more to lose from smoking and drinking, such as teenagers and
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