It's all fun and games until Uncle Sam shows up...

An interesting topic that Seb brought up was the Australian government issuing high taxes on alcohol. This got me thinking about the ways that governments step in and directly try to influence consumer behavior. So for today’s blog post, I would like to take a closer look at the ways the American and Australian government try to control our alcohol consumption.

AUSTRALIAN GOVERNMENT

In order to try to make Australians drink less alcohol and discourage binge drinking, the Australian government has issued multiple taxes on alcohol. Currently there are four different taxes on alcohol which include:

• Excise (indexed twice annually in line with the Consumer Price Index)
• Wine Equalization Tax (WET) (based on sales value)
• Custom Duties (based on alcohol content and sales value)
• Ten percent Goods and Services Tax on all retail alcohol sales

What all this adds up to is a some very expensive alcohol purchases. Below is a graph that shows how these taxes result on different types of drinks.

There is much discussion whether taxation is an effective method of curbing alcohol sales. As far as my housemates go, these taxes have not stopped them from drinking alcohol. The WET tax is currently under discussion also as it causes cheap wine to be even more affordable as wine is the only alcoholic beverage that is taxed on value not alcohol content.

Many other countries such as Sweden and Norway use heavy taxation to influence consumers to buy less alcohol. Some sides will preach of its effectiveness while others are convinced people will have their alcohol one way or another. If you are interested, check out this study to learn more about the effects of alcohol taxation.

AMERICA

One of the main ways I see the American government trying to influence our consumers from drinking alcohol is from our drinking age. America has the oldest drinking age in the world with most countries around the world allowing people to start drinking by age 18.

Drinking ages around the world

Growing up overseas in Korea (drinking age 18) and with mainly Europeans, I did not have the typical high school experience with alcohol. Most of my friends were allowed to drink alcohol by their parents and as foreigners we were never questioned about our ages when being served alcohol. Overall, this ended up taking away the “cool” and “rebellious” factor of drinking and I never felt peer pressure to drink.

Stereotypical American party scene

I was shocked coming to the USA and seeing how obsessed people were about drinking alcohol -- especially when they were underaged. I immediately questioned the decision to have such an old drinking age as it ended up making alcohol seem more “thrilling” rather than just a beverage.

Just like taxation, there are two sides for and against this drinking age. If you are interested, check out this website to read more about it.

DISCUSSION

While taxation and drinking ages attempt to influence consumer behavior towards alcohol, I keep going back to the book, Nudge by Richard Thaler and Cass Sunstein. Instead of trying to directly influence consumers on their alcohol purchases through these methods, what if governments attempted to nudge people towards less drinking? Some nudge ideas I have are:

• Make alcohol difficult to find and buy (only sold in liquor stores)
• Display the harmful effects of alcohol near the shelves or on the bottles
• Provide a “receipt” to consumers at the end of the month that details their alcohol purchases and how it compares to the rest of the community

Those are just a few ideas but I would be interested to see if these nudges would be more effective than these direct interventions.

Using community comparisons

What do you think: Do you think government intervention through taxation and drinking ages are effective? What are some nudges you would do as a government to decrease alcohol consumption?