8. Concluding Observations Economis

8. Concluding Observations
Economists' contributions to the study of the health consequences of drinking have included both theoretical and empirical advances, and have spanned both the positive and normative realms. Arguably the most important contribution has been the repeated empirical demonstration that consumers as a whole are responsive to the general price level of alcoholic beverages. The demand curves for beer, wine and spirits are negatively sloped; more surprisingly the consumption of ethanol is negatively related to the prices of the beverages that contain it, despite the obvious opportunity for substitution among beverage types. As a result, an increase in the price level of alcoholic beverages tends to reduce the prevalence of alcohol abuse and its health-related consequences. Thus the excise tax on alcoholic beverages is an effective alcohol-control measure that can be used to promote the public health.
Economists have been somewhat at odds with the public health community in arguing that the effectiveness of a povemment alcohol-control measure is not sufficient justification for imposing In this area, as in others, consumer sovereignty should be given its due, and in setting policy the social costs of drinking should be balanced against the pleasure to consumers As we have seen, the normative literature has included a debate over how filly to respect preferences of consumers and households, given that consumers are not necessarily well informed about the consequences of drinking, that ethanol is addictive, and that drinkers may take inadequate account of their dependents' welfare. Further economic research is needed to sort out the costs and benefits of write this in 1998), the empirical literature on productivity effects is particularly unsatisfactory; bow can we explain the persistent findings, at least for US data, that drinkers eam more than abstainers, or that for women who drink (but not men) eamings increase with the amount of alcohol consumed? Economists have for the most part simply ignored another important issue, the apparent health benefits of moderate drinking Outside of the policy arena, alcohol remains interesting for economists because it provides a clear example of a commodity whose consumption has important intertemporal effects, and which is subject to social influence. The theory of rational addiction has provided one framework for exploring the first mechanism, there is also an opportunity here to collaborate with psychologists in an effort to reconcile assumptions of the model with experimental evidence on intertemporal Meanwhile, economists are just beginning the study of social infuence