Closing bars and restaurants and pandemic ‘stimulus’ fueled excessive drinking at home.
Closing bars and restaurants and pandemic 'stimulus' fueled excessive drinking at home.
W e can add a new, fatal wave of alcoholism to the unintended consequences of pandemic policy in the United States. Covid policies reduced the financial cost of excessive drinking and flooded families with extra cash.
Although employment fell during the pandemic and remained low, personal incomes surged during the first year and a half, far surpassing the historical records that were set during economic expansions. This economic oddity is largely due to unemployment benefits and three rounds of stimulus checks, which averaged about $30 per day per household above pre-pandemic levels. Although not reflected in the personal-income accounting, the rent-moratorium policy launched with the March 2020 CARES Act is also potentially important. For the 18 months it was in effect, tenants could defer their monthly rent payments, which are about a quarter of a typical tenant’s income.
Ordinary prudence would dictate that households save their abnormal government transfer payments because they cannot last forever. Tenants might also prepare to repay their back rents sometime soon. Indeed, coincident with the transfer payments, average personal-savings rates surged to their own records.
Not everyone follows the averages. Some people, some of the time, succumb to current temptations even though their future is put in jeopardy. This group’s behavior can be particularly important for the purpose of understanding deaths associated with substance abuse. I assume that this group spent at least half of the extra income it received during the pandemic within 18 months, distributed across expenditure categories (other than rent) in the same proportions that it did before the pandemic. One of those categories is alcoholic beverages.
Indeed, reports early in the pandemic showed surging alcohol sales. Based on the sheer amount of money transferred to households through stimulus checks, unemployment benefits, and the rent moratorium, I estimate that the income effect of these programs may by itself have increased alcohol-related fatalities by about 10 percent, or about 6,000 additional deaths through 18 months.
Moreover, an abnormal fraction of the alcohol purchases were for home consumption rather than consumption in a restaurant or bar, where per-gallon prices of alcoholic beverages are three times higher. This shift from restaurant/bar consumption was partly due to state and local policies closing such businesses as “nonessential” but also partly “voluntary” because enough patrons and employees were unwilling to congregate when infectious-disease risk was high. I estimate that the location shift to home consumption reduced the average per gallon price about 18 percent.
History provides several vivid examples of how changes in alcohol prices affect deaths from alcohol-induced causes by changing alcohol consumption. Soviet leader Mikhail Gorbachev hiked alcohol prices to combat alcoholism and deaths fell sharply. We have better Russian data from the Yeltsin era, when inflation-adjusted alcohol prices fell by a factor of five, far more than they did during our pandemic. Sadly, fatal alcohol poisonings more than tripled in Russia between 1990 and 1994.
The pandemic price change is more similar to what happened in Finland in 2004. Estonia joined the European Union at that time, thereby removing trade barriers between the two countries and encouraging Finland to reduce its excise tax. Alcohol prices fell 22 percent in Finland while alcohol-related fatalities increased 24 percent. Interestingly, the price elasticity of deaths suggested by the Yeltsin and Finnish episodes is almost exactly the same, -0.85. On this basis, I predict that our 18 percent price reduction by itself would increase fatalities from alcohol-induced causes by about 15 percent, which would be another 9,000 additional deaths through 18 months.
The chart below shows how these predictions play out over time, accounting for the fact that the shift to home consumption was especially great in spring 2020 and then again in the following winter. With just the price and income effects, fatalities are predicted to peak at 29 percent above the previous trend, whereas the actual result was a peak of 31 percent. Both of these peaks are far in excess of any peaks observed in our nation for as long as these statistics have been kept.
Opponents of pandemic “lockdowns” warned that such policies would put fuel on the pre-existing flames of substance abuse. This warning was widely mocked as a “pet theory” and that 2020 would have no wave of “deaths of despair,” which is a problem that supposedly takes decades to develop.
Because the stay-at-home orders, remote work, and remote learning were hard on mental health, it is tempting to interpret the increase in alcohol deaths as a symptom of a mental-health crisis. Curiously, deaths from suicide fell more than five percent during the pandemic. More work is needed to quantify possible reclassifications between suicide and alcohol deaths. In the meantime, it looks that the roles of prices and incomes go a long way to understanding fatal alcoholism and where it might be headed.