Decreasing access to alcohol might make drug problems worse

Earlier in the year, Alex Tabarrok at Marginal Revolution pointed to this new paper by Jose Fernandez, Stephan Gohmann, and Joshua Pinkston (all University of Louisville). I though it interesting at the time, and I've finally gotten to reading it now. In the paper, the authors essentially compare 'wet' counties and 'dry' counties in Kentucky, in terms of the number of methamphetamine (meth) labs (there's also an intermediate category, the 'moist' counties, where alcohol is available in some areas but not others). I was surprised to read that more than a quarter of all counties in Kentucky are dry (where the sale of alcohol is banned).

Anyway, it's an interesting analysis, with the hypothesis that in counties where alcohol is less available (and so more expensive to obtain), drugs like meth become a relatively cheaper substitute, which increases the quantity of meth consumed (and produced). At least, this is what we would expect from simple economic theory. The authors use a number of different methods, including OLS regression and propensity-score matching, but their preferred method is an instrumental variables approach (which I have earlier discussed here). The instrument of choice is religious affiliation in 1936 (which had a large impact on whether a county became 'dry' after prohibition was ended, and probably doesn't affect the number of meth labs today).

My main concern on reading the paper was the number of meth labs was measured as the number of meth lab seizures, which probably depends on the degree of enforcement activity by police. However, among their robustness checks the authors look at the rate of property crime and don't find it related to their measure of meth lab seizures (although it would be interesting to see whether property crime differed between the wet and dry counties systematically as well).

Onto their results, they find:

relative to wet counties, dry counties have roughly two additional meth lab seizures annually per 100,000 population. This suggests that, if all counties were to become wet, the total number of meth lab seizures in Kentucky would decline by about 25 percent.

The results appear to be quite robust to the choice of measure of alcohol availability (including alcohol outlet density), and estimation method. If you dispense with the meth lab data and look at data on emergency room visits for burns (a likely consequence of amateur meth labs), then the results are similar. And they're not driven by unobserved health trends (no relationship between alcohol availability and either childhood obesity or infant mortality).

Many local councils would probably like to reduce access to alcohol. However, if Fernandez et al.'s analysis holds up for other areas, it suggests that reducing access to alcohol might make drug problems worse.

[HT: Marginal Revolution]