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U.S. Alcohol Affordability and Real Tax Rates, 1950–2011

      Background

      The affordability of alcoholic beverages, determined by the relationship of prices to incomes, may be an important factor in relation to heavy drinking, but little is known about how affordability has changed over time.

      Purpose

      To calculate real prices and affordability measures for alcoholic beverages in the U.S. over the period from 1950 to 2011.

      Methods

      Affordability is calculated as the percentage of mean disposable income required to purchase 1 drink per day of the cheapest spirits, as well as popular brands of spirits, beer, and wine. Alternative income and price measures also are considered. Analyses were conducted in 2012.

      Results

      One drink per day of the cheapest brand of spirits required 0.29% of U.S. mean per capita disposable income in 2011 as compared to 1.02% in 1980, 2.24% in 1970, 3.61% in 1960, and 4.46% in 1950. One drink per day of a popular beer required 0.96% of income in 2010 compared to 4.87% in 1950, whereas a low-priced wine in 2011 required 0.36% of income compared to 1.05% in 1978. Reduced real federal and state tax rates were an important source of the declines in real prices.

      Conclusions

      Alcoholic beverages sold for off-premises consumption are more affordable today than at any time in the past 60 years; dramatic increases in affordability occurred particularly in the 1960s and 1970s. Declines in real prices are a major component of this change. Increases in alcoholic beverage tax rates and/or implementing minimum prices, together with indexing these to inflation could be used to mitigate further declines in real prices.
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      Linked Article

      • Maximizing the Public Health Impact of Alcohol and Tobacco Taxes
        American Journal of Preventive MedicineVol. 44Issue 5
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          Significant increases in alcohol and tobacco taxes are among the most effective policies governments have for improving public health. Higher alcohol taxes reduce the prevalence, frequency, and intensity of drinking,1 as well as the traffic crashes, liver cirrhosis, violence, and other health and social consequences of harmful drinking.2 Likewise, increases in tobacco taxes promote cessation among adult users, prevent young people from taking up tobacco use, and reduce the death, disease, and economic consequences caused by tobacco.
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