Using data from the Monitoring the Future surveys of high school seniors conducted between 1977 and 1992, Dee (1999) addressed this issue by comparing the relationship between alcohol consumption and State beer excise taxes among all States over time. In this analysis, Dee included a fixed-effects indicator for each State to control for unmeasured determinants of alcohol consumption and the State’s excise tax on beer.5 This analysis found that once the State indicators were held constant, beer excise taxes no longer had a significant negative effect on consumption, suggesting that other, unmeasured factors rather than differences in price account for differences in alcohol consumption.
