This discrepancy in findings may stem from the fact that the relative stability of the beer tax makes it highly correlated with other State indicators (e.g., overall drinking sentiments). Accordingly, it is difficult to distinguish the effects of the beer tax and other State fixed effects. Furthermore, as mentioned earlier, State excise taxes are an imperfect measure of the price of alcohol, and biases resulting from measurement errors are exacerbated in fixed-effects models. Thus, although most of the empirical literature supports the conclusion that excise tax increases tend to curtail alcohol consumption and heavy drinking by underage youths and young adults, more research on this important issue is necessary.
