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In this article, we summarize research by economists that deals with the effects of alcoholic beverage prices and excise taxes on a variety of outcomes for youth. These include alcohol consumption (both moderate and excessive), motor vehicle accident mortality, and college completion rates. The research employs six nationally representative data sets on individuals that span the period from 1974 through 1989 and two state-level data sets for the years 1975-1981 and 1982-1988. The studies find that alcohol use and motor vehicle accident mortality are negatively related to the cost of alcohol. College completion rates are positively related to this variable. Clearly, these are policy-relevant findings, because price is a policy-manipulable variable. Frequently, the effects of a variety of simulated excise tax hikes exceed those of the uniform minimum legal drinking age of 21 in all states.
Grossman et al. (Fri,) studied this question.