Underage Alcohol Drinking Costs

by David J. Hanson, Ph.D.

Activist estimates of the costs of their issues of concern are notoriously inflated. This includes estimates by temperance activists of the financial costs of underage drinking.

The Pacific Institute for Research and Evaluation (PIRE) was paid by the Underage Drinking Enforcement Training Center to generate an estimate of the economic costs of underage drinking. PIRE dutifully produced an estimate of a whopping $61.9 billion per year.

However, over 2/3 of that estimate is based on “pain and suffering,” which is not an economic cost. PIRE also includes other phantom costs. Only 8.7% ($5.4 billion) of the estimate actually consists of estimated monetary expenses or costs.

A more serious problem with the PIRE estimate is that it only looks at half the equation. Completely lacking are the economic benefits provided by underage alcohol consumption. PIRE’s method is like looking at household expenses while ignoring household income. Its estimate is not only completely worthless, but is highly deceptive.

Elsewhere, PIRE estimates that underage drinkers consume alcoholic beverages valued at $18.1 billion per year. This represents an economic benefit of $18.1 billion in federal, state and local taxes, profits, wages and salaries, and income to those involved in farming, transportation, advertising, packaging, construction, and many other goods and services.

Using PIRE’s own figures, the economic costs of underage alcohol consumption are $5.4 billion while the economic benefits are $18.1 billion. Thus there is no economic cost of $61.9 billion but a net economic benefit of $12.7 billion.

Although the United States benefits economically from underage alcohol consumption, the abuse of alcohol is nevertheless highly undesirable.


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