Habit forming:

A few weeks ago, we noted that Economics of Smoking were such that raising prices reduced the amount people smoked. While many other factors may have also contributed to the decline, the simple fact
may be basic economics of cost has been the prime mover.

The NYT takes this a step further. They look at a variety of teen vices, and conclude that:

"There is in fact a surefire way
to get teenagers to consume less beer, tobacco and drugs, according to one study
after another: raise the cost, in terms of either dollars or potential
punishment.

In just about every state that increased beer taxes in recent years, teenage
drinking soon dropped. The same happened in the early 1990′s when Arizona,
Maryland, New Jersey and a handful of other states passed zero-tolerance laws,
which suspend the licenses of under-21 drivers who have any trace of alcohol in
their blood. In states that waited until the late 90′s to adopt zero tolerance,
like Colorado, Indiana and South Carolina, the decline generally did not happen
until after the law was in place.

Teenagers, it turns out, are highly rational creatures in some ways.
Budweisers and Marlboros are discretionary items, and their customers treat them
as such. Gasoline consumption, by contrast, changes only marginally when the
price of a gallon does."

Fascinating stuff . . .

Our streak of beating the NYT continues

>

Sources:
To Reduce the Cost of Teenage Temptation, Why Not Just Raise the Price of Sin?
By DAVID LEONHARDT
All Consuming
NYT, July 25, 2005
http://www.nytimes.com/2005/07/25/business/25consuming.html

Category: Economy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

6 Responses to “Why Not Just Raise the Price of Sin?”

  1. Dave says:

    John Marshsall said, “The Power to tax is the power to destroy”, by this thinking we should replace to payroll tax with a carbon-fuel tax. Both are regressive and it would seem we want to encourage the increase of jobs and decrease the use of fuel….

    Tax “bad” things not good things…

    (Then higher fuel prices would be a tax on the economy…)

  2. james says:

    you cant dispute the facts stated above, and i certainly am not. i’d just like to ask when the folly of normative economic reasoning ends?

  3. Dudes –

    what are on earth are you guys talkin about?

  4. james says:

    what’s the greater risk to teens barry? binge drinking, smoking, fast food, unsafe sex, automobiles, motorcylces, football, or soda pop? i’m sure we could conjure up an array of supply demand schedules that prove that if we raise the barriers to entry into these activities we could curb the fatalities/diseases in all of these activities. however, could we quantify the loss of our freedoms with such neat and handy graphs? and if we could – what would be the cost?

  5. james says:

    clarification – in my original post – i was refering to your post – not the comment made by dave – sorry

  6. The point of the graph is to show that if we, as a society, want to curb a behavior, an effective strategy is to make it more expensive.

    The alternatives — massive PR campaigns, social pressure, etc., — aren’t nearly as effective.

    As to the “freedom” aspect — your every person’s freedom ends where someone else’s begins. Teens who drink often drive, and endanger others as well as themselves. Teens who use tobaco and become lifetime smokers impart a societal cost (second hand smoke, medical costs, productivity losses).

    As much as I believe in the free market, I do not have a problem with enlightened collective self interest, and appropriate legislation. If that means making it cost more for teens to drink or smoke, than so be it.