Monday, August 30, 2010

Ahead of the Curve

Forgive the preening, but sometimes bloggers can be ahead of the curve in covering an important story.

In this particular case, my prescience was not displayed on my blog (what you're reading now) but on my page.

Sunday's Washington Post featured a long article by Rosalind S. Helderman headlined "Virginia ponders losing ABC stores; studies conflict on privatizing liquor sales," in which she cites a study conducted by Duquesne University economist Antony Davies:

A much broader study in Pennsylvania examined 36 years of data from 48 states with varying degrees of alcohol control. It found that private states have lower per-capita alcohol consumption and lower drunken-driving fatalities than states where government controls segments of the industry. It found no significant difference in underage drinking between the two models.

Like the recent Virginia report, it was funded by a foundation that advocates smaller government. But its author has submitted the findings to an academic journal for review, and he defended the results as unbiased.

"The fact is, we can play that game, who gets funded by whom," said Antony Davies, the Duquesne University economist who wrote the report.

"What happens is, we all have to go home, and nobody asks any questions at all. Everybody gets funded by someone," he said. "The better thing to do is to give researchers the benefit of the doubt that they're trying to find truth, and then look at the data and the studies."
Please note that, before the Post ever wrote about Antony Davies, I interviewed him for, and actually quoted him on the substance of his research, rather than about the game critics play about "who gets funded by whom."

Here's an excerpt from that August 5 interview, which I titled "Economist Antony Davies debunks arguments against liquor sale privatization":
A 2009 study he wrote for the Commonwealth Foundation for Public Policy Alternatives (a Pennsylvania think tank) with fellow Duquesne economist John Pulito, resulted in these findings, based on statistics from 1970 through 2006:

“….advocates claim that the social goals of reducing alcohol consumption, underage drinking, and alcohol-related traffic deaths justify controlling wholesale and retail alcohol markets.

“Evidence from 48 states over time shows no link between market controls and these social goals.”

Dr. Davies said in the interview that “we’re not seeing any evidence that greater control leads to better social outcomes.”

There is an exception, however, that Davies pointed out over the telephone: “DUI fatalities are significantly higher in states with more control than states with less control.”

Other factors, however, are different, he said. “If you look at per capita alcohol consumption, there’s no difference as you move from full to moderate to light control.”

Underage Drinking
As to claims that state-owned liquor stores are a better protection against selling alcohol to minors and underage drinking, Davies explained that people think “at a gut level” that private businesses “have an incentive to sell to minors. We see that’s not the case.”

Why not? “If alcohol is sold in the private market, the owner of the store has a profit incentive not to sell to minors, because if he gets caught, he loses his license. He wants to protect his business.”

Davies, who is also a visiting scholar at the Mercatus Center at George Mason University in Northern Virginia, concludes: “If you look at the data, there’s no clear pattern [that emerges showing] that imposing more control reduces underage drinking.”
Note, too, that I specifically name the Commonwealth Foundation while the Post refers to it vaguely as "a foundation that advocates smaller government" (as if that's a bad thing).

Helderman deserves credit for seeking out a free-market economist like Dr. Davies for her story.  But you heard about him from me first -- just like Governor Bob McDonnell telling me that the Post got it wrong in reporting that he was leaning toward selling the ABC system to a single high bidder.

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