Sunday opening hours and alcohol consumption

According to the research literature (nicely summarised in the book Alcohol: No Ordinary Commodity), one of the most effective policies for reducing alcohol consumption and related harm is to reduce the opening hours of licensed outlets. However, that policy advice seems to apply to on-licence outlets (bars, nightclubs, etc.). If bars are open more hours, people drink more alcohol at bars - that seems pretty uncontroversial. However, the literature is much less clear on the effects of off-licence outlets' (bottle stores, supermarkets, etc.) opening hours on consumption. If off-licence outlets are open longer, do people purchase and consume more alcohol?

The reason for the lack of clarity may be because people purchase alcohol from off-licence outlets to consume at home, and they can also store alcohol at home for future consumption. So a forward-planning consumer can purchase alcohol for consumption at home when they find themselves close to an off-licence outlet, and then store it for later consumption.

However, are consumers really forward planning in this way? I have a report coming out soon that looks at the purchasing behaviour of pre-drinkers (people who had been drinking before going out to the CBD). I can't release the details of that report just yet, but in the meantime, consider this 2016 article by Douglas Bernheim (Stanford), Jonathan Meer (Texas A&M), and Neva Novarro (Pomona College), published in the American Economic Journal: Economic Policy (ungated earlier version here).

Bernheim et al. are actually investigating (somewhat indirectly) whether consumers regulate the amount of alcohol they store at home, in response to the availability of retail alcohol. If consumers restrict the availability of alcohol to themselves by not storing quantities of alcohol at home, then restricting alcohol sales on Sundays would reduce alcohol consumption (and liberalising Sunday sales would increase consumption).

Bernheim et al. investigate this by looking at regulations across U.S. states that either restricted or liberalised the number of hours that alcohol could be sold on Sundays, over the period from 1970 to 2007, and how those changes related to changes in alcohol consumption. They found that:

Widening the allowable on-premise Sunday sales window by 1 hour is associated with a statistically significant 0.94 percent (standard error = 0.29 percent) increase in sales. Taking the linear specification literally, the point estimate implies that allowing 12 hours of Sunday on-premises sales increases total liquor consumption by roughly 11 percent...

In contrast, expanding the allowable off-premise Sunday sales window by 1 hour is associated with a small and statistically insignificant 0.08 percent (standard error = 0.24 percent) increase in sales. Formally, we cannot reject the hypothesis that the effect of off-premises sales hours is zero.

In other words, lower Sunday hours for on-licences (bars, etc.) reduces state-level consumption, but lower Sunday hours for off-licences has no effect. Bernheim et al. conclude that:

...the observed pattern coincides with predictions for time-consistent or naïvely time- inconsistent consumers who have reasonably good memories and low costs of carrying inventories.

In other words, consumers do seem to stock up on alcohol, whether purposefully or accidentally (this research is unable to distinguish between those two situations). So, regulating opening hours for off-licences as a way of reducing consumption is likely to be frustrated by consumer behaviour.