1:30 PM - 2:30 PM
Bracken Library, Swartz Digital Viewing Room
In the U.S., our state-based alcohol taxes are among the lowest in the world. These tax rates are based on estimates of price elasticity, which is used to determine how a tax will burden consumers relative to suppliers. This discussion will demonstrate that economic estimates and studies are only as good as the available data. In a recent study, McGeary finds that a commonly used price series unreliably predicted alcohol demand elasticities—suggesting alcohol tax rates should be low. Using Uniform Product Code (UPC) “barcode” scanner data on grocery store alcohol prices, McGeary and her colleagues were able to accurately estimate the price elasticity demand for alcohol, concluding that tax rates should be markedly higher.