UVA’s student body has heard it and seen it before, from the critical opinion articles from Charlottesville residents to the harsh glances as older neighbors see students with drinks in hand. All these interactions originate from a critique of UVA students’ drinking habits. However, economic logic suggests that that beer belly (or, in the context of this article, liquor belly) is actually doing the community a service.
As any 21-year-old Virginian knows, alcohol can only be purchased at government-run ABC stores (a public monopoly, as Emma analyzed in her post). An interesting factoid of ABC stores in Virginia is that they return more than $600 million annually to the state’s general fund. Put another way, that $20 handle you bought the other day contributed almost $9 to Virginia schools, roads, and even funding for state universities. In comparison, for a traditional $20 purchase, less than a dollar would go to state and local governments. Thus, logic follows that liquor purchases are a positive consumption externality in alcohol-controlled states like Virginia given their significant financial contribution to society. In that vein, our state would be right to encourage hard alcohol consumption because of its social marginal benefit.
By examining the benefits to civil society from liquor purchases, we can see that the social marginal benefit of liquor consumption is greater than the private marginal benefit. Of course, this post does not analyze the long-term costs to society with regards to the risks of drunk driving and other long-term health effects. However, in this simplistic lens of consumption, the solution is clear: party on – our communities demand it.
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