The  economics  of  alcohol-control  policies

Alcohol consumption has been growing in India, especially among the young male population. Not only is alcohol a serious health threat, as the recent events of spurious liquor deaths in Assam have tragically shown, it can also be a drain on the incomes of the low-income working youth.

In a new study, Frank Schilbach of the Massachusetts Institute of Technology (MIT) explores alternatives to curb this socio-economic problem in the form of financial incentives for sobriety.

In a three-week field experiment with 229 cycle-rickshaw drivers in Chennai, a population known for alcohol addiction, Schilbach offered a random subset of individuals financial incentives for staying sober, while another group were offered a choice between conditional sobriety incentives and unconditional payments.

Schilbach found that financial incentives for sobriety can significantly reduce day drinking among cycle-rickshaw drivers, but the sobriety incentives do not meaningfully affect overall drinking. The rickshaw drivers turned up sober during official visits, but they are likely to have shifted alcohol consumption to evenings.

Surprisingly, Schilbach did not find that decreased day time drinking leads to increased work, productivity or earnings. However, the incentives did positively affect savings behaviour of the individuals.

Encouragingly, though, Schilbach found that individuals who were offered a choice between monetary payments for keeping sober and unconditional payments, chose the conditional payments displaying a desire for sobriety, despite its limited impact on overall drinking. The author argues that this suggests that individuals may have overestimated their ability for self-control.

The study shows important behavioural aspects of alcohol addiction and therefore sheds light on how to tackle alcohol addiction in India.

Also Read: Alcohol and Self-Control: A Field Experiment in India