Fueled in part by the high-profile national media attention garnered by the Amethyst Initiative and Choose Responsibility, activists and policymakers in several states, including Kentucky, Wisconsin, South Carolina, Missouri, South Dakota, Minnesota, and Vermont, have put forth various legislative proposals to lower their state's drinking age from 21 to 18, though no state has adopted a lower minimum legal drinking age yet.
Does the age-21 drinking limit in the United States reduce alcohol consumption by young adults and its harms, or as the signatories of the Amethyst Initiative contend, is it “not working”? Alcohol consumption and its harms are extremely common among young adults. According to results from the 2006–2007 National Health Interview Survey, adults age 18–25 report that on average they drank on 36 days in the previous year and typically consumed 5.1 drinks on the days they drank. If consumed at a single sitting, five drinks meets the clinical definition of “binge” or “heavy episodic” drinking. This consumption contributes to a substantial public health problem: five drinks for a 160-pound man with a limited time between drinks leads to a blood alcohol concentration of about 0.12 percent and results in moderate to severe impairments in coordination, concentration, reflexes, reaction time, depth perception, and peripheral vision. For comparison, the legal limit for driving in the United States is generally 0.08 percent blood alcohol content. Not surprisingly, motor vehicle accidents (the leading cause of death and injury in this age group), homicides, suicides, falls, and other accidents are all strongly associated with alcohol consumption (Bonnie and O'Connell, 2004). Because around 80 percent of deaths among young adults are due to these “external” causes (as opposed to cancer, infectious disease, or other “internal” causes), policies that change the ways in and extent to which young people consume alcohol have the potential to affect the mortality rate of this population substantially.
In this paper, we summarize a large and compelling body of empirical evidence which shows that one of the central claims of the signatories of the Amethyst Initiative is incorrect: setting the minimum legal drinking age at 21 clearly reduces alcohol consumption and its major harms. However, this finding alone is not a sufficient justification for the current minimum legal drinking age, in part because it does not take into account the benefits of alcohol consumption. To put it another way, it is likely that restricting the alcohol consumption of people in their late 20s (or even older) would also reduce alcohol-related harms at least modestly. However, given the much lower rate at which adults in this age group experience alcohol-related harms, their utility from drinking likely outweighs the associated costs. Thus, when considering at what age to set the minimum legal drinking age, we need to determine if the reduction in alcohol-related harms justifies the reduction in consumer surplus that results from preventing people from consuming alcohol.
We begin this paper by examining the case for government intervention targeting the alcohol consumption of young adults. We develop an analytic framework to identify the parameters that are required to compare candidate ages at which to set the minimum legal drinking age. Next, we discuss the challenges inherent in estimating the effects of the minimum legal drinking age and describe what we believe are the two most compelling approaches to address these challenges: a panel fixed-effects approach and a regression discontinuity approach. We present estimates of the effect of the minimum legal drinking age on mortality from these two designs, and we also discuss what is known about the relationship between the minimum legal drinking age and other adverse outcomes such as nonfatal injury and crime. We then document the effect of the minimum legal drinking age on alcohol consumption, which lets us estimate the costs of adverse alcohol-related events on a per-drink basis. Finally we return to the analytic framework and use it to determine what the empirical evidence suggests is the correct age at which to set the minimum legal drinking age.
Alcohol consumption by young adults results in numerous harms including deaths, injuries, commission of crime, criminal victimization, risky sexual behavior, and reduced workforce productivity. A substantial portion of these harms are either directly imposed on other individuals (as is the case with crime) or largely transferred to society as a whole through insurance markets as is the case with injuries (Phelps, 1988). In addition, there is the theoretical possibility (supported by laboratory evidence) that youths may discount future utility too heavily, underestimate the future harm of their current behavior, and/or mispredict how they will feel about their choices in the future (O'Donoghue and Rabin, 2001). If this is the case, even risks that are borne directly by the drinker are not being fully taken into account when an individual is deciding how much alcohol to consume. Given that young adults are imposing costs on others and probably not fully taking into account their own cost of alcohol consumption, there is a case for government intervention targeting their alcohol consumption. The minimum legal drinking age represents one approach to reducing drinking by young adults.1
Determining the optimal age at which to set the minimum legal drinking age requires estimates of the loss in consumer surplus that results from reducing peoples' alcohol consumption. It also requires estimating the benefits to the drinker and to others from reducing alcohol-related harms. Unfortunately, it is not possible to obtain credible estimates of these key parameters at every point in the age distribution. First, there are no credible estimates of the effects of drinking ages lower than 18 or higher than 21 because the minimum legal drinking age has not been set outside this range in a signififi cant portion of the United States since the 1930s, and the countries with current drinking ages outside this range look very different from the United States. In fact, as we describe in detail in the next section, even estimating the effects on adverse outcomes of a drinking age in the 18 to 21 range is challenging. Second, we lack good ways to estimate the consumer surplus loss that results from restricting drinking, a problem that has characterized the entire literature on optimal alcohol control and taxation (see Gruber, 2001, for a general discussion).
Thus, rather than try to estimate the optimal age at which to set the minimum legal drinking age, we focus on an analysis that is more feasible and useful from a policy perspective. The drinking age in the United States is currently 21, and there is no push to raise it. If it is lowered, there are many reasons to believe it will most likely be lowered to 18. First, the primary effort by activists for a lower drinking age is to lower the age to 18, either on its own or in conjunction with other alcoholcontrol initiatives such as education programs. In fact, 18 was the most commonly chosen age among the states that adopted lower minimum legal drinking ages in the 1970s. Second, 18 is the age of majority for other important activities such as voting, military service, and serving on juries, thus making it a natural focal point (though notably many states set different minimum ages for a variety of other activities such as driving, consenting to sexual activity, gambling, and purchasing handguns). Finally, many other countries have set their minimum legal drinking age at 18.
Because a change in the drinking age is likely to involve lowering it from 21 to 18, we focus on estimating the effect of lowering the drinking age by this amount on alcohol consumption, costs borne by the drinker, and costs borne by other people. Alcohol consumption can result in harms through many different channels. The effects of age-based drinking restrictions on long-term harms are very hard to estimate so we focus on the major acute harms that result from alcohol consumption including: deaths, nonfatal injuries, and crime. We pay particular attention to the effect of the drinking age on mortality because mortality is well-measured, has been the outcome focused on by much of the previous research on this topic, and is arguably the most costly of alcohol-related harms. To avoid the difficulty of trying to estimate the increase in consumer surplus that results from allowing people to drink, we estimate how much drinking is likely to increase if the drinking age is lowered from 21 to 18 and compare this to the likely increase in harms to the drinker and to other people. This allows us to characterize the harms in terms of dollars per drink. Since we are missing some of the acute harms and all of the long-term harms of alcohol consumption, the estimates we present in this paper are lower bounds of the costs associated with each drink.
Adding how much the drinker paid for the drink to the cost per drink borne by the drinker yields a lower bound on how much a person would have to value the drink for its consumption to be the result of a fully informed and rational choice. The per-drink cost borne by people other than the drinker provides a lower bound on the externality cost. If the externality cost is large or if the total cost of a drink (costs imposed on others plus costs the drinker bears privately plus the the price of the drink itself) is larger than what we believe the value of the drink is to the person consuming it, then this would suggest that the higher drinking age is justified.
