Economics is about more than just statistics. It has the power to take information drawn from history and connect it to what could happen in our future. On April 5, renowned economist Professor Orley Ashenfelter and Professor of Economics at Princeton University Joseph Douglas Green made that connection. The two men were at Vassar as speakers for the annual Martin H. Crego Lecture in Economics. Ashenfelter is considered to be one of the founding fathers of modern labor economics by Professor of Economics Paul Ruud.
The Crego Lecture was established in 1965 in honor of Martin H. Crego, the father of Jean E. Crego ’32. According to the Vassar website, “The non-academic study of economics was a source of interest and satisfaction throughout his life, and his keen judgment and wise handling of economics matters, and the generous legacy received from him make possible this gift in his memory.” In his introductory remarks for Ashenfelter’s lecture Ruud said, “The annual lecture is intended to bring persons of recognized ability in some area of the field of economics or related subjects to campus to share their experiences and practices in talking and meeting with students.”
In his lecture, “Evaluating the Economic Effects of the Noble Experiment: National Prohibition, 1920-1933,” Ashenfelter discussed Prohibition and compared the U.S. economic and social trends that characterized the era with those of Great Britain, a country that did not have Prohibition. A comparison of this sort can be described as a “natural experiment”—an experiment that examines the effects of a particular variable, over which the investigators had no control, on a group of subjects.
According to Ruud, “Economists are always looking for so-called ‘natural experiments,’ because one of the problems with social science generally, and economics specifically, is that we actually don’t run experiments. So we can’t assign treatments randomly, the way you would in a medical experiment, or a physics experiment, to try to control for other factors that are beyond your ability to actually set.” The central question of Ashenfelter’s experiment, then, might be: “Did Prohibition cause changes in drinking patterns among the United States population?”
Prohibition–termed “The Great Experiment, Noble in Intention” by President Herbert Hoover–was made law in 1919 with the passage of the 18th Amendment, or the Volstead Act. Prohibition had been championed for years by the Anti-Saloon League and the Women’s Christian Temperance Union who believed that a ban on alcoholic drinks would reduce crime and improve national health.
Ashenfelter became interested in studying Prohibition after discovering that grape production in some states, including California, increased dramatically during Prohibition. “This is not what most people, including me, thought had occurred,” Ashenfelter concluded.
Indeed, the Prohibition Era has long been characterized by images of speakeasies and home-brewed “moonshine.” A significant increase in grape production during this time period, suggesting an increase in home wine production, upsets this long-standing image.
Ashenfelter demonstrated that, between the years of 1919 and 1933, the passage and repeal of Prohibition, wine consumption among Americans actually doubled. A major reason was the “non-intoxicating fruit juices” that farmers produced through a quasi-loophole for home wine makers.
Overall alcohol consumption went down in the U.S. during Prohibition, but that didn’t necessarily mean that Prohibition was successful. While U.S. alcohol consumption decreased by 42 percent during Prohibition, alcohol consumption in Great Britain decreased by 41 percent during this same time period. Some scholars attribute the drop seen in Britain to the Great Depression, others believe it was a result of tighter alcohol regulations (e.g., shorter opening hours for liquor stores, higher taxes on beer) during the interwar years and many contend that the decline can be put down to a combination of these factors.
With this comparison in mind, can it legitimately be argued that Prohibition caused a decrease in alcohol consumption among the U.S. population? Ashenfelter maintained that it could not. However, two other conclusions can be derived from this comparison between the U.S. and the UK. The first is that Prohibition in the United States led to increased crime rates (which decreased after its repeal in 1933). The second is that there is no clear evidence to support the claim that Prohibition improved the health of the national population. In short, however “noble” it may have been in its intentions, Prohibition did little to improve the general well-being of the United States.
Both Ruud and Ashenfelter believe that studying Prohibition in this context can bring a critical perspective to more recent policies and political events–in particular, the War on Drugs and the federal prohibition of marijuana. Ashenfelter said, “I think that learning what really happened during Prohibition is a natural way to begin thinking about modern drug policies.” Indeed, if a decade-long ban on alcohol served not only to increase crime rates, but to encourage the home-brewing of alcohol (for which there were no federally-determined health standards that had to be complied with), is a ban on other substances of similar physical and psychological effects truly in the best interests of the United States population?