Bamboozled: Why Government-Run Liquore Stores are Socially and Economically Impractical

The privatization of Pennsylvania’s liquor stores is an idea that has been floating around the halls of Harrisburg for decades. The sale of stores alone would generate over $1.7 billion dollars in profit, while continuing to bring in close to $350 million a year through the alcohol sales tax. Ever since Pennsylvania seized control of wine and liquor in 1932, advocates of state-run liquor stores have touted the supposed social benefits. However, recent research clearly demonstrates that privatization would have little impact on social outcomes.

Defenders of the government-run liquor stores argue the state can directly regulate the time, location and quantity of liquor for purchase, thereby decreasing the overall consumption of alcohol. However, when looking at consumption rates in Iowa and West Virginia, two of the most recent states to move to licensing of retail liquor, Commonwealth Foundation scholars John Pulito and Antony Davies of Duquesne University found consumption actually decreased, by as much as 5.9%. One explanation is that with more convenient hours and less restrictive purchasing guidelines, consumers are buying less alcohol per trip.

Another main argument for full state control is that private retailers of alcohol tend to be less stringent with carding procedures, making the government more likely to discourage underage drinking. Thus, we should expect to see an average decrease in underage consumption when comparing state-controlled vs. license states, but the National Survey on Drug Use and Health shows no such correlation.

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Michael J. Nerozzi is a Research Associate with the Commonwealth Foundation, an independent, nonprofit ublic policy research and educational institute based in Harrisburg