The Decentralization of Liquor Policies in Texas During the Post‐Prohibition Era

ABSTRACT We examine the decentralization of liquor policies in Texas during the Post‐Prohibition era using newly collected historical legislative roll call data. By combining these data with local referendum vote shares, we analyze both legislators' and constituents' preferences on liquor policy. We develop a probabilistic voting model incorporating spillovers and peer effects. Results reveal substantial heterogeneity in preferences among voters, reflecting differing attitudes toward alcohol regulation. Spillover effects are significant, yet the model predicts notable gains from decentralization. Finally, we link legislators' policy preferences to alcohol consumption data and compare model‐based welfare estimates with traditional consumption‐based measures.