Douglas J. Young

Alcohol regulation and auto fatalities

Abstract We examine the relationship between motor-vehicle fatalities and alcohol taxes, prices, and various drinking laws. Estimates are based on data from 48 states over 9 years and consider total, youth, and alcohol-involved fatalities. None of the beer tax or price coefficients is significantly different from 0. The magnitudes of the estimated effects are much smaller than those reported in some previous studies. Seatbelt laws, the minimum legal drinking age, and dram-shop laws typically have statistically significant, negative relationships with fatalities. Other variables—including preliminary breath tests and various mandatory penalties for driving under the influence—are imprecisely estimated, sometimes have incorrect signs, and are usually not statistically significant.

Educational Attainment and Cohort Size

We argue that the postwar baby boom caused substantial fluctuations in both the economic rewards to education and educational attainment over the last 3 decades. If substitutability between young and old workers diminishes with education, the present value of lifetime earnings for a boom cohort is depressed more for highly educated workers, reducing incentives for educational attainment. The opposite is true for pre- and postboom cohorts. The diminishing substitutability hypothesis explains the declines in both the returns to college and college completion rates in the 1970s and predicts a substantial increase in educational attainment for postboomers.

Alcohol prices, consumption and traffic fatalities

We examine the relationships among alcohol prices, consumption, and traffic fatalities using data across U.S. states from 1982 to 2000. Some previous studies have found large, negative associations between alcohol taxes and fatalities. However, commonly used price data suggest little or no connection between alcohol prices and fatalities. These apparently conflicting findings may result from measurement error and/or endogeneity in the price data, which biases ordinary least squares estimators toward a finding of no price effects. Using alcohol taxes as instrumental variables, fatalities are found to be negatively related to prices. In addition, alcohol consumption is strongly positively related to fatalities. However, biases may still remain, because taxes are not entirely suitable as instruments.

Do Advertising Bans Work? An International Comparison

Advertising bans can increase or decrease alcohol consumption due to effects on beverage choice, price competition, and substitution by producers towards non-banned media. We study bans on broadcast advertising in 17 OECD countries for the years 1977 to 1995, in relation to per capita alcohol consumption, liver cirrhosis mortality and motor vehicle fatalities. The results indicate that advertising bans in OECD countries have not decreased alcohol consumption or alcohol abuse.

Alcohol advertising bans and alcohol abuse: Comment

Abstract Henry Saffer [Saffer (1991) Journal of Health Economics 10, 65–79] concludes that bans on broadcast advertising for alcoholic beverages reduce total alcohol consumption, motor vehicle fatalities, and cirrhosis deaths. A reexamination of his data and procedures reveals a number of flaws. First, there is evidence of reverse causation: countries with low consumption/death rates tend to adopt advertising bans, creating a (spurious) negative correlation between bans and consumption/death rates. Second, even this correlation largely disappears when the estimates are corrected for serial correlation. Third, estimates based on the components of consumption — spirits, beer and wine — mostly indicate that bans are associated with increased consumption.

The effects of demographic change on the distribution of wages 1967-1990

A multiple skill model (MSM) of labor inputs in production functions is presented in this paper. Previous researchers have aggregated workers into a small number of categories along various demographic dimensions in a fashion that is arbitrary and inconsistent across studies. The MSM, of which category models are special cases, avoids arbitrary aggregation and permits a much richer specification of the relationship between the demographic characteristics of a population, output, and the distribution of wages. The MSM is employed to explain changes in the distribution of wages from 1967 to 1977 across four major demographic dimensions-age, education, race, and sex. The results are largely consistent with previous studies of relative wages along one or two demographic dimensions, but one finding is different. The decline in wages of young males relative to older males is confined to males with a college education.

Voluntary purchase of public goods

This paper examines the application of Buchanans ‘independent adjustment’ model of public good provision to individual donations to voluntary or non-profit organizations. An individuals donation function is a simple transformation of the Marshallian demand function; consequently donation functions ‘reveal,’ in principle, preferences for public goods. The existence of a tax-subsidy system sustaining a Pareto optimal level of provision is demonstrated, and the relationship to the existing subsidy scheme in the U.S. is examined. Finally, two implications of the model suggest that it is not appropriate as a representation of actual donor behavior.

A ‘fair share’ model of public good provision

Abstract Many voluntary or non-profit organizations produce outputs that are best characterized as public goods. These organizations are financed, at least in part. by donations from individuals. Only models which incorporate internal (psychic) rewards for donating appear to be consistent with actual donor behavior. A simple ‘fair share’ model is proposed as an example. It is shown that under weak restrictions on demand, the donation process is locally stable about the Lindahl allocation. The process therefore converges to an efficient level of public good provision entirely without government intervention.

Accounting for Changes in Alcohol Use and Abuse in the United States

Per capita alcohol consumption, teen drinking, and alcohol-involved traffic fatalities show declines ranging from 16% to 40% since their peaks around 1980. This article examines how beverage prices, the minimum legal drinking age (MLDA), population aging, and teen attitudes contributed to the declines. Two policy variables that have garnered much attention—taxes and the MLDA—appear to have played a minimal role. Alcohol prices declined, which encouraged more drinking rather than less, and large Federal excise tax increases occurred after much of the decline had already taken place. Increases in the legal drinking age account for only a fraction of the declines in teen drinking and traffic fatalities. Changes in the age distribution of the population can account for a substantial fraction of the decline in per capita consumption, but not the decline in teen drinking. Heightened anti-alcohol sentiment among high school seniors has played an important role in the decline in youth drinking. Educational programs and increased penalties/stiffer enforcement of driving under the influence laws probably contributed to the declines, but wide-ranging estimates make a quantitative assessment uncertain. Future research must account for complex social environments.

From Wall Street to Main Street: The Financial Crisis in the US

What caused the ‘meltdown’ in the US financial markets? In this transcribed version of his talk delivered at IIMA, Douglas Young explores the variety of factors that influenced the housing boom and bust and discusses how that affected the household saving behaviour and the behaviour of lenders in the mortgage market, ultimately culminating into a financial crisis. The factors which led to the crisis include public policy, financial innovation, and just plain ‘bubble mania’ – the belief that real estate prices would just keep on rising forever. The policy responses are in three stages – (a) prevention of a collapse in the financial system; (b) Economic Stimulus and Recovery Act in place to cut taxes, increase infrastructure spending, etc., and (c) regulatory reforms for the financial system. The consequences of financial crisis for the Wall Street, Main Street, and India are also discussed.