Alcohol Liberalization and Its Externalities in Kentucky

• In Event: Food and Beverage Policies

Abstract

Background: Excessive alcohol use costs the United States approximately $249 billion annually and is linked to over 140,000 deaths per year. Despite this burden, the national trend over the past two decades has leaned toward local liberalization, with counties and municipalities across the US voting to relax restrictive alcohol sales policies through "local option" elections.  Yet the public health consequences of this incremental deregulation remain poorly understood, largely because prior research focuses on national-level interventions and rarely distinguishes between different types of policy transitions. Kentucky offers a particularly compelling setting: counties are classified as dry (no retail alcohol sales permitted), wet (full retail sales permitted), or moist (a dry county containing one or more wet cities).

Purpose/Research Question: This study estimates the causal effects of local alcohol access liberalization on (1) DUI arrests, and (2) alcohol-involved traffic crashes and fatalities in Kentucky. Critically, I disaggregate effects by transition type (dry-to-wet, moist-to-wet, and dry-to-moist), testing whether the public health consequences of liberalization are homogeneous across policy contexts.

Data: I construct a county-by-month panel dataset covering all 120 Kentucky counties from 2009 to 2022. Alcohol outcomes are drawn from the Behavioral Risk Factor Surveillance System (BRFSS), the Fatality Analysis Reporting System (FARS), and the FBI Uniform Crime Report's Summary Reporting System. 

Research Design and Methods: I estimate Poisson pseudo-maximum likelihood (PPML) difference-in-differences models with high-dimensional fixed effects to account for the count nature of crash and arrest outcomes. A continuous dose variable captures both the share of county population covered by newly liberalized sales and the fraction of the month the policy is active, enabling a dose-response interpretation that moves beyond binary treatment indicators. Event study specifications are used to assess pre-treatment parallel trends and characterize dynamic post-treatment effects. I also implement Wooldridge's Extended Two-Way Fixed Effects as a robustness check against heterogeneous treatment effect bias.

Results: Preliminary findings suggest that pooled full-sample estimates mask substantial heterogeneity by transition type. Initial disaggregated analyses indicate that transitions from fully dry to wet or moist status are associated with increases in alcohol-involved traffic crashes and fatalities, while moist to wet transitions produce smaller and less consistent effects. Full results and robustness checks are ongoing.

Conclusion/Implications: These findings suggest that treating local alcohol liberalization as a uniform policy exposure obscures consequential heterogeneity in its public health effects. The transition from fully dry to any form of permitted sales appears to carry the largest and most consistent increases in alcohol-involved traffic fatalities and crashes, while more marginal relaxations produce smaller effects. For policymakers in Kentucky and similarly situated states, these results suggest that proactive accompanying interventions, including enhanced DUI enforcement, targeted public safety campaigns, and investment in rural transportation infrastructure, may be warranted when communities vote to transition away from complete prohibition.

Author

• Cooper Smiley, University of Georgia
  Presenting Author