This empirical study evaluates the policy responsiveness of teen drinking in models that can condition on the unobserved state-specific attributes that may have biased conventional evaluations. The results demonstrate that cross-state heterogeneity can be important and that beer taxes have relatively small and statistically insignificant effects on teen drinking. Models of youth traffic fatalities also indicate that the conventional beer tax elasticities are not robust to additional controls for omitted variables. The importance of these omitted variables is illustrated by a counterfactual which compares models of night-time fatalities to those that occur in the daytime when the rate of alcohol involvement is substantially lower. (Author/publisher)
Abstract