February 2015

IZA DP No. 8849: The Cost of Binge Drinking

revised version published as "Liquid Assets? The Short-Run Liabilities of Binge Drinking" in: Economic Journal, 2019, 129(621), 2090-2136

We estimate the effect of binge drinking on accident and emergency attendances, road accidents, arrests, and the number of police officers on duty using a variety of unique data from Britain and a two-sample minimum distance estimation procedure. Our estimates, which reveal sizeable effects of bingeing on all outcomes, are then used to monetize the short-term externalities of binge drinking. We find that these externalities are on average £4.9 billion per year ($7 billion), about £80 for each man, woman, and child living in the UK. The price that internalizes this externality is equivalent to an additional 9p per alcoholic unit, implying a 20% increase with respect to the current average price.