Alcohol Affordability in the US: The cost of one drink per day of the cheapest brand as a percentage of disposable income, 1950-2011

Alcohol affordability has been generally measured in terms of the relationship between the price of alcohol and individual income with the key measurement issues being which price and income measures are the most appropriate. Alcoholic beverage prices vary greatly across contexts, beverage types and brands making the choice of any single price, or price index difficult. This study compares several options for both price and income measures with a focus on the price of the cheapest brand as a percentage of per capita disposable income as a key measure. Results show that real income is now three times higher than in the 1950's and the real price of the cheapest brand of spirits is one fifth its 1950's cost. The affordability measure shows that one drink per day cost 4.5% of mean disposable income in 1950 and now costs only 0.3% of disposable income, making the cost burden 1/15th of its 1950 value. Although data is limited, results for low priced beer indicate a similar rise in affordability since the 1960's. The cheapest spirits now cost as little as $0.25 per standard drink in some states compared to a real (2011-$) price of about $1.60 in the 1950's. The real value of state and federal sprits taxes are now only about one sixth of their 1950 values. Affordability of alcohol is at an all time high in the US primarily due to rising real incomes and the dramatic declines in the real values of both federal and state alcohol taxes.