For the majority of Americans, the consumption of alcoholic beverages plays some role in their lives, whether it takes the shape of a drink out with friends, a glass of wine at a restaurant or a beer after work. According to the Centers for Disease Control and Prevention, around two-thirds of American adults consumed alcohol in 2018. While alcohol consumption has been decreasing over time, a study from Gallup found that 54% of Americans reported drinking alcohol in 2025. A significant proportion of these Americans engage only in light drinking; the CDC found that just 5.1% engaged in heavy drinking in 2018. However, though that proportion is small, the economic costs of excessive alcohol consumption are significant and often underestimated.
In 2010, the National Institute on Alcohol Abuse and Alcoholism estimated that alcohol misuse cost the United States $249 billion due to increased health expenditures, productivity losses, motor vehicle accidents and other direct and indirect effects. To put this into perspective, this is more than three times the amount the U.S. government spent on the Supplemental Nutrition Assistance Program that year. Meanwhile, Harvard Medical School estimates that the annual cost of treating alcohol-associated liver disease will more than double from $31 billion in 2022 to $66 billion by 2040. Further, one study on heavy drinking in high-income countries found that in most of them, the societal costs of alcohol were approximately one percent of a country’s GDP.
The costs of alcohol extend beyond economic ones. According to the National Highway Traffic Safety Administration, 12,429 people died in preventable alcohol-impaired traffic accidents in 2023. About 30% of all traffic crash fatalities in the U.S. involve drunk drivers and from 2014–23, about 11,000 people died annually due to drunk driving.
Furthermore, alcohol is correlated with crime. According to the U.S. Department of Justice, alcohol is a factor in 40% of all violent crimes. This combination of significant and wide-ranging societal costs led The Economist to label alcohol as the most harmful drug over substances like heroin (which it noted had greater harm to individual users).
The economic and social costs of alcohol are largely unpriced negative externalities. These costs play no role in the market prices of alcoholic beverages and are instead collectively borne by the public. Typically, when these types of costs arise, a common proposition is for the government to intervene — common examples include congestion pricing and carbon taxes.
However, it is important to note that the last major attempt by the federal government to intervene in the alcohol market was disastrous. From 1920 to 1933, the U.S. government enacted a policy of Prohibition — a complete ban on the manufacturing, transportation and sale of liquor. This move increased illegal sales, shifted consumption toward the purchase of illegal and unregulated liquors and likely contributed to increased gang violence and organized crime. Therefore, there is reasonable hesitation toward renewed government intervention in the American alcohol market.
Nonetheless, there are policy interventions that can effectively straddle the line between ineffective bans and inaction. One such policy is minimum unit pricing, or MUP, which sets a price floor per unit of alcohol across product.
MUP has a record of success in Scotland, where it was implemented in 2018. Public Health Scotland found that it reduced deaths directly caused by alcohol consumption by about 13.4% without negative impacts on alcohol producers or sellers as a whole. This is likely because MUP raises the prices of the cheapest and strongest alcohol products, thereby targeting the consumption patterns of heavy drinkers. As a result, MUP was able to target excessive alcohol consumption without leading to significant drops in consumption that would drive sellers out of businesses. The World Health Organization has identified such policies as “among the most cost-effective measures that countries can use to reduce alcohol consumption and harms” alongside pricing policies such as increasing the alcohol excise tax.
A second policy that should be considered is standardized and mandated harm labeling on alcohol containers. Similar to warning labels on unhealthy foods, we can apply this practice to alcohol. A systematic review published in The Lancet found that these labels “probably influence some alcohol consumption behavior” and may help address “alcohol-related harms.” Though labeling has less evidence than pricing policies, labeling should be further researched and enacted if found effective.
Finally, more should be done to increase awareness of the health risks of excessive alcohol use. More than half of Americans are unaware that alcohol increases cancer risk, and Pew Research Center found 57% of Americans who drink do not believe their alcohol consumption increases the risk of serious physical health problems “at all.”
None of this is to say alcohol or educated drinking is inherently bad. Pew also found that many Americans report that alcohol enhances their enjoyment of food and meals. In some ways, though the magnitude of health impacts may differ, alcohol is not so different from other indulgences, like a scoop of ice cream or a bag of chips. However, alcohol differs in its uniquely high social costs which are borne by all Americans. Through these moderate policy measures, it is possible to address these societal costs without disrupting everyday life.
