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Calling Time on Minimum Pricing

Posted by Dr No on 16 February 2012

beer_st_2.jpgOnce again, the brown trout that wont flush away has bobbed up for air. Yesterday, David Cameron put alcohol minimum pricing back on the agenda. Across the land, responsible doctors cried Cheers! The Chair of the Royal College of General Practitioners, Dr Clare Gerada, who counts addiction – in others, one hastens to add – among her special interests, spoke for many when she tweeted the price, availability and advertising is all mantra. This mantra is underpinned by left shift, which sounds cool, being the sort of thing cool astronomers like Brian ‘Wow, Magnificent’ Cox might say, but it suffers from a defect WM would never allow: it is chasing the wrong hair, or rather tail, of the dog. In practice, minimum pricing will be spectacularly ineffective at reducing high alcohol use, and even worse, it will almost certainly result in blowback, by which Dr No refers not to the visit to the loo on the morning after the night before, but unintended harm arising from well-intentioned practice.

The minimum pricing will work mantra rests on two related ideas. The first, which has curiously become doctrine, even dogma, despite being more hypothesis than theory, is the left shift notion. This is the idea, and idea it is, because it has proved remarkably difficult to demonstrate robustly in practice, that the behavioural body wags the behavioural tail; that is, if we reduce average consumption, then so too will we similarly reduce consumption in heavy consumers, the ‘left shift’ being the resulting move to the left of the bell shaped curve when we plot the distribution on a graph.

The second factor we need to consider is what Wingnut and Meccano when speaking with the tongues of economists call price elasticity of demand. This deceptively complex sounding term is in fact nothing more than a consideration and measure of how price affects consumption. If the price of petrol goes up, do we choose to drive less (and either cancel our journey, or perhaps go by train instead), or do we still drive as much as we did before, because driving is the only way we can get to work? The more we change our behaviour in response to price changes, the more price elastic our behaviour is.

We can even measure, and put numbers on, price elasticity, and economists, being economists, do just that. We can divide a corresponding percentage change in consumption by the percentage change in price that accompanies it, and produce an index. If a 10% increase in price is accompanied by a 10% decrease in consumption, we get an index of one, or unit elasticity. Indexes between zero and one are said to indicate price inelasticity (behaviour changes by less than price); indexes over one indicate price elasticity. In the special case where consumption remains unchanged, whatever the price, we get an index of zero, or perfect inelasticity. Because the change in consumption is almost invariably negative (a decrease), the elasticity is negative (-10% consumption/+10% price), and the index is properly expressed as a negative number (-1).

Now, for left shift thinking to work, alcohol consumption needs not only to be reasonably elastic (or at the very least – sorry - ‘relatively un-inelastic’), it also needs to be so across the board, for all drinkers, whatever their tipple, and whatever their habitual consumption. The closer price elasticity gets to zero, the more ineffective left shift thinking will become; the bigger the number, the more effective it will be. So what do we know about price elasticity for alcohol?

Unsurprisingly, given the economic and health importance of alcohol, many studies have been done, enough to allow meta-analysis, and it is perhaps fair to say the meta-analysis (‘1003 estimates from 112 studies’) is this 2009 paper. The overall figure it gives for total alcohol price elasticity is around –0.5, that is to say, alcohol is rather inelastic (despite the upbeat tone of the authors). And it gets worse for the left shift lovers. Price elasticity for beer, the binge-drinking lager-lout’s tipple, is less, at –0.46 (although higher for wine and spirits, at –0.69 and –0.80), while that for heavy drinkers is considerably lower, at –0.28.

What this means is that a 10% hike in alcohol price will be associated with a 2.8% fall in heavy drinkers’ consumption. To get a meaningful drop in consumption – say 28%, to keeps the sums easy, and even that only reduces 60 units a week to around 43 units - we would need to increase price by a whopping 100% across the board. Now, just somehow, Dr No doesn’t see that happening…and any left shift that might occur if minimum pricing were introduced would leave heavy drinkers relatively untouched. The curve would not so much left shift as left stretch, and that just doesn’t sound as cool.

And the blowback? Well, for heavy drinkers with an elasticity of –0.28%, every 10% hike in cost will only consumption back by 2.8%, so overall, net expenditure will increase. And for anyone on a fixed average or low income, that can only mean one thing: less to spend on food, less to spend on kids, less to spend on things that matter. And where will that extra spending on booze go? Why – if the increase is achieved by minimum pricing – it will go straight into the pockets of the supermarkets and drinks manufacturers. GPs, even chair GPs, should be careful what they tweet for.

Statistical (a) and lexicological (b) footnote: (a) readers who follow the links to the stats will find frequent references to the results being highly significant. Note this is statistical significance only (the obtained result is highly unlikely to differ from the true value); it tells us nothing about real world significance, meaning or usefulness. (b) Dr No suspects some of the confusion about price effects on arise because of confusion between the vaguer concept price sensitivity (alcohol is price sensitive, but how much?) and the more precise price elasticity, which provides a numerical measure of how sensitive (not very much at all – alcohol is relatively price inelastic). The two terms may overlap, but are not interchangeable.

1 comment:

As your good self, I believe that heavy drinkers will continue to drink (at whatever cost) as they are indeed addicted. Whether the dependence is psychological and/or physical the craving is there and must be met.

In my workplace the alcoholics that still drink – and there are a few - on their limited budget put alcohol first, way above cigarettes – and will purchase alcohol first and worry about cigarettes later (always another resident or staff to pester/bully into feeding their secondary habit).

Some are aware of their liver disease but this matters not, some have reached the point where they cannot cease or death will surely follow (and we are on strict medical instructions /orders that alcohol must be provided).

Abuse and aggression – whether verbal or physical – is commonplace whether sober (and craving) or drunk.

Transfer this to a home setting and I dread to think how families will cope if minimum pricing is introduced for not only will there be less food on the table there will be more violence (whether of word or deed) too.

It is naïve to think that minimum pricing will reduce alcoholism or binge drinking. Binge drinking is now (sadly) part of our culture and perhaps education of the dangers of over imbibing will provide results? Somehow I think not as the ability to swill a large amount of alcohol offers street cred’ and perhaps we need to look at social ‘issues’ and why binge drinking is considered as a necessary part of the (perceived) rite of passage from childhood to adulthood.

The great plan of 24hr drinking in the hope that we would develop a ‘café culture’ has been a complete failure as Cameron’s great idea – his anti binge drinking strategy – proves.

Interestingly there has been little research here (UK) on the affects of 24hr drinking – the only research I could find was mentioned here

Please see authors’ conclusion:

“This review found that increasing the hours when alcohol may be served in on-licensed premises by at least two hours a day increased alcohol-related harms.”

“Though it found UK evidence equivocal, Britain's National Institute for Health and Clinical Excellence also concluded that as well as reducing the number of outlets, making it harder to buy alcohol by limiting days and hours when it can be sold effectively reduces alcohol-related harm.”

I think NICE is completely wrong in that reducing outlets reduces harm for indeed a great number of our pubs have closed (effect of the smoking ban) pushing ‘customers’ to drink at home and ‘Yes’ they will purchase their tipple at the local supermarket – but will do so irrespective of price.

Although it may be a case of closing the stable door after the horse as bolted, perhaps a return to an 11pm ‘closing time’ should be a first step?

Anna :o]

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