Thursday, September 18, 2008

The Economics of Binge Drinking: A Proposal

September 18, 2008, 10:30 a.m.
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A Serious Suggestion for Iowa City City Council's
Revisit of Alcohol Regulations

Occasionally I give the University and the City Council (and bar owners) a bit of a hard time for their failure to do anything meaningful and effective with regard to students' irresponsible drinking and its consequences.

So when the Council appears willing to take another look at the matter I want to acknowledge that fact, and make what I hope will be received as a serious suggestion. Chris Rhatigan, "Council to look at alcohol rules," Iowa City Press-Citizen , September 17, 2008, p. A3 ("The Iowa City Council will discuss regulations on alcohol at its next work session [Monday, September 22, 6:30 p.m.]. Mayor Regenia Bailey said a variety of alcohol-related issues will be on the table. . . . One subject that will be addressed is well-drink or mixed-drink pitchers.").

I don't claim that this idea has been thoroughly thought through and vetted, or that it couldn't be improved with at least some tweaking. But I do think it's something consistent with what the Council and others have talked about in the past, and is at least worth the Council putting on the table and considering along with its other options.

Of all the efforts to discourage those 3000 youngsters who become the tobacco industry's "replacement smokers" each year (i.e., replacements for the industry's customers killed by tobacco) one of the most effective turned out to be simply raising the price of a pack of cigarettes. Might that also be a useful approach to excessive consumption of alcohol?

And no, I'm not about to suggest the Iowa City City Council start setting the city-wide price of a glass of beer. (Joke follows: Although if it would impose a sufficient city beer tax it could probably eliminate the property tax as well as the binge drinking.)

What I'm about to propose be considered can be thought of as a sub-set of the focus on keg sales, beer pitcher specials, and what the Council referred to as "well-drink or mixed-drink pitchers."

Would it be possible for the Council to legislate the elimination of such discounts? (I've made no effort to research the legality of its doing so.)

The Council would not be setting prices. Each bar owner could continue to do that -- presumably coming up with prices that would maximize his or her income.

But it would be required to be a permanent, fixed price -- per ounce or other volume -- that would not vary by occasion (e.g., 21st birthday), day of the week or year, or time of the day (e.g., "happy hour").

Say, to just arbitrarily pick a number, a bar owner decides to sell domestic beer for 20 cents an ounce. A 12-oz. glass is $2.40, a 16-oz. glass is $3.20, a gallon (128 oz.) is $25.60. There would be no economic incentive to buy (and consume) larger quantities -- or to come to the bar when discount price "specials" were offered.

(Presumably there might be a need to have separate per-ounce prices for domestic and imported beers, and of course for hard liquor -- but that would also be the bar owner's choice.)

Prices would be set by the bar owners: s/he could charge 15 cents or 30 cents or whatever other amount they wished for beer; but whatever they chose would be their price 24/7 (subject, perhaps, to some opportunity for adjustment up or down to a different, "permanent" 24/7 rate every, say, 90 or 180 days as their experience, and profits, might dictate).

This is, admittedly, a very limited proposal with presumably relatively limited effect. It doesn't deal with the sale of kegs or cases of beer, or the incongruous practice of permitting under age customers into a business the sole purpose of which is to profit from the sale of alcohol when the sale to those individuals is a violation of law (for all of which I have other ideas).

This approach would not interfere with "social drinking," responsible alcohol consumption in bars -- whether legally or illegally. What it would do is reduce the economic incentive to binge drink, and the consequences of such intoxication, provided by the "specials" that make such behavior so much more economically affordable.

Just a thought.

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Me said...

Interesting idea. One counterpoint: my wedding would've had to have been moved out of town if this were enacted prior to July. I only went through two kegs for the 150 to 200 people, but I doubt I could've afforded nearly 800 bucks for those two kegs. And a dry reception was out of the question. So my roughly $5000 reception would've been given to Cedar Rapids instead.

Anonymous said...

The Iowa ABD (Alcoholic Beverages Division) has some relevant data. The give a cost breakdown for a 750 ml bottle of Jack Daniel's and the cost per ounce is about $0.75.

They also give the alcohol sales in Fy07 & Fy08 by county and the sales for Johnson County are too large to be displayed but the amount sold in Fy08 was 224,124 gallons. the sales per gallon for other counties range between $37 to $42 per gallon depending on the mix of beer, wine and spirits I suppose.

A one cent per ounce tax on alcohol would cover about 10% of the cost of Johnson County incarceration services provided by the jail. That is fairly close to the alcohol related costs of jail operations. However it would be a tax not a service charge because most people that purchase alcohol do not used services provided by the jail.

Another approach would be to require a drinking license with a $250 returnable deposit if there are no alcohol related convictions during the license year.

Anonymous said...

How about we quit making useless laws and prosecute those that break the current laws.
A drunk and disorderly costs you two officer’s hourly wage for the time it takes to write your tickets. Urinating in public … again the officer’s time plus the costs to have Safety-Clean come in and decontaminate city property you just disrespected. We don’t need more laws we need people to abide by the ones that are on the books.