Reducing underage alcohol and tobacco use: evidence from the introduction of vertical identification cards.

From 1994 to 2009, forty-three states changed the design of their driver's license/state identification cards in an effort to reduce underage access to and consumption of alcohol and tobacco. In these states, individuals under the age of 21 are issued licenses that are vertically oriented, whereas licenses for individuals 21 and older retain a traditional horizontal shape. This paper examines the effect of this design change on underage alcohol and tobacco use. Using a difference-in-differences methodology, we find a reduction in drinking and smoking for 16 year olds. These results are upheld in a triple difference model that uses a within state control group of teens that did not receive a vertical license to control for state-specific unobserved factors. Interestingly, we find that the effects of the design change are concentrated in the 1-2 years after a state begins issuing vertical licenses. We consider various explanations for our findings: teen learning, the availability of false identification, and changes in retailer behavior.