A cost-benefit analysis of enforcement efforts to reduce serving intoxicated patrons

We conducted a cost-benefit analysis of a pilot program of increased enforcement of laws forbidding service to intoxicated patrons. This study provides an example of the issues that typically arise in cost-benefit analysis applied to a program directed at alcohol abuse. We provide a methodology for translating reported DWIs into cost savings. We also present benefit measures that distinguish pain and suffering from productive loss, that distinguish social costs from losses internalized by the individual and that allow for substitution of other unsafe activity.

The analysis is based on a case study conducted in Washtenaw, Michigan. We used data from police files on sources of DWIs before and after implementation of a program aimed at enforcement of alcohol server laws. To estimate the dollar value of benefits from reducing DWIs, we use incidence data and a number of different recently developed measures of alcohol-involved crash costs. Our study, however, provides the component costs of alcohol-involved crashes and distinguishes external costs from other costs.

Our estimates indicate that the Washtenaw SIP program provides benefits that greatly exceed its costs. This result holds under a variety of different assumptions about the appropriate measurement of social benefits.

Although the benefits are in all cases large relative to the costs, they are highly sensitive to whether the savings include personal losses and losses borne directly by intoxicated drivers, and whether harmful activity is diverted to other costly activities. Thus, our study highlights the importance of underlying assumptions that are commonly made in conducting cost-benefit analyses of programs aimed at substance abuse.