Do Alcohol Excise Taxes Reduce Motor Vehicle Fatalities? Evidence from Two Illinois Tax Increases

This study examines the effect of alcohol excise taxes on alcohol- related fatal traffic crashes. In 2015, 29.3 percent of the 35,092 traffic fatalities in the United States involved someone driving under the influence of alcohol. Raising federal or state excise taxes on alcoholic beverages could reduce demand for alcohol and alcohol-related traffic fatalities, but within the large literature on the behavioral effects of alcohol prices and excise taxes there is no clear answer on the effect of tax increases on drunk driving deaths. We examine two large increases in excise taxes in Illinois that occurred in 1999 and in 2009. Using the synthetic control method, we do not find evidence that the tax increases led to a long-term reduction in alcohol-related traffic fatalities. Our results are robust across several specifications, although we do find evidence that, following the 2009 increase, Illinois counties that do not share a border with another state experienced a temporary drop in alcohol-related traffic fatalities.

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