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Category: Project

Description: This project asks how raising excise taxes on liquor effects alcohol-related traffic fatalities. This is important because although one third of all traffic fatalities involve alcohol, the large literature on the behavioral effects of alcohol prices and excise taxes has relatively little to say on the topic. A major obstacle to research is that federal excise taxes affect all states simultaneously and so there are no control states, but state liquor taxes are rarely changed and when changed, they are changed by relatively small amounts. We plan to address that problem by studying the experience of Illinois, which sharply raised its excise tax on liquor in 2000 and again in 2009. With only one treated entity a simple difference-in-differences estimator is impractical, and so we plan to use the synthetic control method of Abadie, Diamond and Hainmueller (2010). Our primary dataset is drawn from FARS (Fatality Analysis Reporting System), an administrative dataset assembled and maintained by the National Highway Traffic Safety Administration. It is supplemented with data on mortality rates from the Center for Disease Control, personal income from the Bureau of Economic Analysis, gas taxes and number of drivers from the Federal Highway Administration, and beer, wine and spirits excise taxes from a variety of datasets.