Our Chicago readers know that St. Patrick’s Day in the Windy City means dyeing the Chicago river green (this year, the City actually dyed the river on Saturday March 14th), which is a great excuse to break out the classic line from the movie The Fugitive: “If they can dye the river green today, why can’t they dye it blue the other 364 days of the year?”
In the spirit of green dye and St. Patrick’s Day, Wayne Smith sends along an idea that he calls “Progressive Pricing for Drinking Holidays.” Smith argues that this proposal reduces binge drinking without “greatly penalizing” bar owners. We’ll let our bar-owning (or beer-drinking) readers decide.
Binge drinking is a big problem on St. Patrick’s Day in many areas, especially in college towns. The Nudge idea I propose is progressive pricing for alcoholic drinks on “Drinking” Holidays like St. Patty’s Day, New Year’s Eve, Halloween (or the last day of finals). The objective is to reduce the number of people who binge drink using price controls without greatly penalizing bar owners.
A hypothetical implementation of the nudge might work like this:
Typically, drink specials aren’t offered by bars on big selling days like these. The bars could start the Drinking Holiday by offering a special drink price, say a fluorescent-green-dyed beer for $2.50 rather than $3.50. As the day progresses and the cumulative amount people have had to drink increases, the price of the beer would increase on a regular schedule, say by $0.25 each hour. Assuming that the drinking day starts at 3pm (a stretch for some party-school towns), the price schedule would look like this:
3:00 PM $2.50
4:00 PM $2.75
5:00 PM $3.00
6:00 PM $3.25
7:00 PM $3.50
8:00 PM $3.75
9:00 PM $4.00
10:00 PM $4.25
11:00 PM $4.50
12:00 AM $4.75
1:00 AM $5.00
2:00 AM $5.25
This allows for a five hour Happy Hour to draw in many customers, but more than doubles the price of beer by last call, thus nudging people away from buying more beer out at the bar.
There are some hitches with this idea. Foremost, is the question of whether bar patrons would notice the price increases if they are inebriated. Secondly, the price schedule would have to be implemented across the municipality to ensure that bars couldn’t take advantage of another bar’s price structuring. That is not to say that bars would have to engage in price fixing, rather they would have to increase prices every hour, prices they would set on their own with the stipulation that they at least double the price of beer by closing time. Market forces should find a reasonable floor for prices. Losses from patrons refusing to buy more drinks at later hours will be offset by those who will pay double for a drink and the increased volume during early hours. Hopefully, these will be latecomers and not people who have spent 11 hours at the bar.