Date of Award

5-2016

Document Type

Honors Thesis

Degree Name

Bachelor of Science

Department

Economics

Advisor/Committee Chair

Baris Yoruk

Abstract

Since the prohibition act of 1919, alcohol has always had high economic costs and benefits. While it increases revenues for the Federal Government through taxation and company profits, there are, unfortunately, several costs that impact society. These costs, also known as negative externalities, include a variety of actions like alcohol related traffic accidents, increased crime, and excessive binge drinking. A negative externality is described as “a cost that is suffered by a third party as a result of an economic transaction,” in which the third party is indirectly affected (MaClean, 2013). In the case of alcohol, society is the third party being inadvertently affected by the transactions of producers and consumers. In order to reign in on some of the economic costs related to alcohol, Federal and State Governments have enacted various laws to try and limit or prohibit activities that cause these negative externalities. And even though there have been numerous studies done in economics to evaluate the effectiveness of said laws, conclusions still remain convoluted. In this study, I hope to unravel some of the complexity surrounding the effectiveness of one relatively understudied topic in economics: beer keg registration laws. This specific law requires that there be a tag/sticker with a unique identification number attached to each keg sold. This law only includes kegs exceeding a certain limit, usually a two to eight gallon minimum depending on the state (Figure 1). When the purchaser receives an identifying number with their keg, they must also leave information with the retailer, such as name, address, and telephone number (“APIS,” n.d.). During my study I would like to look at adolescent use of alcohol and assess the effectiveness of this law on limiting their binge drinking.

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