Restricting the recreational consumption of alcohol – by instituting so-called ''dry laws'' that limit bar opening hours – can have a dramatic effect in reducing violent crime. A study of São Paulo in Brazil by Professor Ciro Biderman and colleagues finds that dry laws led to a 10% fall in rates of homicide, battery and death by car accident.
The researchers, whose work is published in the March 2010 Economic Journal, say that their results do not suggest putting limits on general alcohol consumption:
''Restricting recreational consumption is less radical and more targeted than prohibition. The purpose is not to prevent people from drinking, but to make it difficult to do so in particularly dangerous settings.
''Restricting opening hours has the advantage of being easily enforceable compared with enforcement of the minimum drinking age.''
The researchers study the impact of social consumption of alcohol on murder, the ultimate form of violence. They estimate the causal effect on homicide of restricting the recreational consumption of alcohol – through mandatory night closing hours for bars and restaurants (known as ''dry laws'') with a typical curfew at 11pm.
The study evaluates the impact of dry laws on homicides by taking advantage of a unique empirical opportunity. Between March 2001 and August 2004, 16 out of 39 municipalities in the São Paulo Metropolitan Area adopted dry laws.
By comparing the dynamics of crime between adopting and non-adopting cities, the researchers find that dry laws caused monthly homicide rates per 100,000 inhabitants to fall by almost 0.5, which means a 10% reduction. They find similar effects on battery and deaths by car accident. These are the first robust estimates of the impact of alcohol restrictions for bars and restaurants on violent crime.
Figure 1 summarises the central finding. Not surprisingly, adopting cities were more violent than non-adopting cities before adoption, but homicides were dropping at about the same rate before adoption.
Around the year 2002, when most cities adopted the dry law, homicides started to drop much faster in adopting cities. While in 2001, homicides in adopting cities were 15% higher than in non-adopting cities, rates were the same in 2004.
Figure 1 does not provide indisputable evidence that dry laws caused a reduction on homicides. Adopting cities may have implemented other crime-fighting policies, which is all the more likely because adoption occurred in violent cities.
Although the research controls for a long list of ''other suspects'', there might be some ''non-observable'' policy affecting crime implemented along with dry laws. Furthermore, adopting and non-adopting cities could be following different secular trends prior to adoption, although Figure 1 suggests otherwise. Finally, mean reversion (''high crime'' cities reducing homicides at a faster pace) could produce the results mechanically.
To show that dry laws did have a causal effect on homicide rates, the researchers establish the following facts:
- First, the mechanism is operative: consumption of alcohol in bars fell after adoption.
- Second, the distribution of homicides during the day in adopting cities shifted towards a higher proportion of homicides committed in the evening (between 5pm and 10:59pm) and a lower proportion of homicides during the night and early morning (11pm through 6:59am).
- Third, dry laws had no impact on crimes such as vehicle robbery, cargo robbery and bank robbery. These crime categories serve as falsification tests: if dry laws were capturing the adoption of other non-observed policies, then dry laws would be correlated (without a causal relationship) to these crime categories.
- Finally, although more violent cities tended to adopt the curfew, adoption did not occur at particularly violent periods. Thus, mean reversion is unlikely to have produced the results spuriously.
The authors comment:
''Restricting opening hours has the advantage of being easily enforceable compared with enforcement of the minimum drinking age. Thus, our results provide a guarded support for policies that restrain the recreational consumption of alcohol. We use the word ''guarded'' because in different institutional settings, these results may not arise.''
The researchers conclude that extrapolation to general alcohol consumption is not warranted. Previous results in research on the economics of crime have shown that prohibition and taxation fail because they do not reduce consumption and may shift consumption to heavier ''psychotropic'' substances.
''Dry Laws and Homicides: Evidence from the Sao Paolo Metropolitan Area'' by Ciro Biderman, João De Mello and Alexandre Schnieder is published in the March 2010 issue of the Economic Journal.
