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Gluganomics


Posted by Dr No on 14 May 2012

gluganomics.jpgToday’s announcement by Scotland’s Minister for Emesis, Nicola Stugeron, that the Scottish government intends to set a 50p minimum unit price for alcohol reminds Dr No that a similar bell is set to toll South of the Border. Forty-eight hours after Porgie’s boomerang budget, the one that keeps on coming back to tap the Tories where it hurts, Theresa May was pushed on to the floor of the Commons, in a reckless bigger-the-pushed’un-the-better-the-cushion move, to zap hostile media coverage of the budget, by announcing the Westminster government’s own Alcohol Strategy. Needless to say, that strategy also contains proposals for minimum unit pricing, and, needless to say, both governments are equally deluded in their expectations that this daft policy will do any good. In fact, Dr No predicts it may even do harm.

The notion that minimum pricing will work is speculative, based as it is solely on economic modelling, itself a souped-up version of Fun with Excel Spreadsheets. Resting on economic principles of supply and demand, the idea is that an increase in price will bring about a fall in demand, that is to say alcohol consumption. So far so good, but then the problems start. The data commonly used, if not so much moonshine, is at the very least not without problems (much of it being unverified self-reported data), added to which there is much cross-linking of data sets, wild assumptions, statistical chicanery and general obfuscation of the kind commonly encountered in the Science That Makes Astrology Look Respectable.

But – and here’s the irony – even if we accept economics is the name of the game – its methods suggest that minimum pricing, far from going with a champagne fizz, will instead be flat beer. Dr No will come to show how this might be shortly, but first he makes three more generalised observations that seem to him to bear on the wisdom, or otherwise, of introducing minimum unit pricing for alcohol.

The first two observations are that minimum pricing is both toff-friendly and business-friendly – which might explain why the Tories like the idea. Those who know the price of their Bolly, if not their milk, will be unaffected, because the price of their booze already far exceeds the minimum price threshold. This makes minimum pricing regressive – it hits those most likely to consume lower price booze, the poorest, hardest. And, to add insult to injury, the mark-up on lower price booze will go not to government – where one might forlornly hope it would be used to fund something useful, like the NHS – it will go instead into the coffers of retailers and drinks manufacturers.

Thirdly, recent trends in drinking behaviour (not to mention long term and even longer term trends) show that alcohol consumption, instead of being an increasing problem, is in fact declining. Average weekly consumption, the percentage of people drinking above recommended limits and so called binge-drinking (more than 8/6 units on one occasion for men/women) have all declined over the last five years (see tables 2.1 2.2 and 2.4 from the ONS here, and yes the methodology did change in 2006 but the trends are still there) - making now a neat time, in the Machiavellian way, to set minimum pricing.

Now, to return to economics, or, as Dr No calls this subset of the Science That Makes Astrology Look Respectable, gluganomics. The effect of price on demand (consumption) is wrapped up in the notion of price elasticity. This obfuscation is in fact a simple numerical measure of how changes in price are reflected in changes in consumption. Thus, for example, an elasticity of –0.5 means that for a certain increase in price, consumption will fall by half that amount: a ten percent increase in price will cause a five percent drop (10% x –0.5) in consumption. Products whose consumption is more sensitive to price are said to be price elastic (and the elasticity number is relatively large); those whose consumption is relatively insensitive to price (the elasticity number is small) are said to be price inelastic – right the way down to an elasticity of zero (no change in consumption, what ever the price), a state known as perfect inelasticity.

The problem for minimum pricing advocates is that alcohol consumption is relatively inelastic – in other words, increases in price are matched by relatively small changes in consumption. Quoted overall and subcategory elasticities for alcohol vary greatly, but there is a general consensus that the overall elasticity is around –0.5 (a ten percent increase in price generates a five percent fall in consumption; a fifty percent increase in price will reduce consumption by 25 percent, and so on).

So, not only is the effect of raising prices somewhat trivial (even a fifty percent increase say in a bottle of wine from £4 to £6 would result three bottles bought when previously it would have been four), the consumer also ends up paying more for less: £18 (£6 x 3), compared to £16 (£4 x 4) before the hike. No doubt the well-off will accommodate the extra expense, but for the poor, and those low disposable incomes, that extra money will come out of another budget – like quality food, or the kids’ school clothes…which is how minimum pricing will cause harm.

And – if that isn’t bad enough – price elasticity for heavier drinkers is even more inelastic – of the order of –0.28: so consumption is even less affected by raising prices. The £4 to £6 wine bottle hike above will, in the heavier drinker, be met by a mere 14% (50% x –0.28) drop in consumption (about half a bottle of the four), yet the total cost will increase from £16 to £21 (£6 x 3.5). No doubt the well-off will accommodate the extra expense, but for the poor, and those low disposable incomes, that extra money will come out of another budget – like quality food, or the kids’ school clothes…which is how minimum pricing will cause harm.

Gluganomics, and its fanciful prodigy alcohol minimum unit pricing, will lead to only trivial falls in consumption, and so only trivial reductions in alcohol related harm. But far worse, it will hit poor families hard where it hurts most: in their pockets, and so in their well-being. It is bad medicine, and should be scrapped, in favour of a strategy that not only avoids harm, but actually achieves what it sets out to do: reduce alcohol related harm.

18 comments:

There are only three ways of addressing the public health disaster we are facing with alcohol
a) Increase price
b) Reduce availability through restricting opening times, off licence sales, enforcing law re underage sales etc
c) Reduce adverstising
All else - is too use the vernacular, pissing in the wind
Clare

Clare

Firstly, it is not clear we are facing a new 'public health disaster' with alcohol. Consider football hooligans in The Seventies, or - to go back a long way - Gin Lane. It's an old problem, not a new disaster.

Dr No deliberately left out any suggestion of alternative approaches in the post. That said, he thinks your (a), (b) and (c) solutions are controlling, puritanical, and doomed to fail. Instead, he is inclined to think it is about cultural shifts. He is old enough to remember when drink-driving was seen as a bit laddish (and by the way could tell a horror story about a bunch of rural GPs, alcohol and its effects), and young enough to know how unacceptable such behaviour is today. Attitudes, and more importantly behaviour, have changed - but why? Instead of laying down the law, we should perhaps consider what works - assuming we have the power to influence such things, and why.

I have come to know our local street drunks. I say hello, check if they're ok if they are seemingly out cold, buy the odd takeaway, chat when they're lonely etc. They are rejected by most people. Putting up the price of alcohol won't stop them drinking. They'll beg more, steal more, eat less, not pay the rent...but they won't stop drinking. For that, they need practical and positive support.

As for the binge drinkers, after a few drinks they don't give a toss how much money they'll have left the next morning. They just keep binging until eventually they turn up at the advice centre to sort out their debt problems. There's a lot that could be done to tackle this problem, but putting up alcohol prices won't.

My closest friend is a recovering alcoholic. The cost of drink was irrelevant to her. What has helped her to stop drinking is practical support, including by her GP, and a lot of love.

There is 100 years of evidence that as with all drugs, the three main factors are price, advertising and availability. So - we can say "price was nothing to do with my local drunk" - is not the case. Low price facilitates drinking and once addicted supports the habit - the higher the price, the less likely is someone to drink. Doesn't stop but less likely. Alcohol use follows a J shaped curve and what we need to do is shift the entire curve to the left to reduce the numbers drinking at dangerous amounts. Health promotion, prevention activities are pissing in the wind unless we deal with the three issues i mentioned above. Think about seat-belt, Festingers cognitive dissonance, no amount of information etc will shift behaviour for the majority- behaviour shifted by change in law.
PS as for PH disaster
It is- think about liver disease, head injuries, alcohol related brain damage

The problem with rationalising that increasing alcohol price will decrease consumption amongst those with a problem is that it assumes a rationality not associated with addiction. Price inelasticity of 'fags and booze' is known to be poor, many advocate investment for that reason during economic downturn, as it is the last thing people seem to want to compromise on.
As Dr No pointed out, it will result in unfavourable prioritising at the expense of other priorities like diet, heating and wellbeing.
Maybe increased cost (especially from the Supermarket) might prevent students like myself binge drinking however, and while most leave it behind when they leave uni, a few will develop life long drinking problems. From a social perspective price parity with Pubs would be a good outcome, but it would be at the cost of those at the bottom of society.

An addiction is an addiction is an addiction; legislation will not alter that fact. Seat belts and minimum alcohol prices are not comparable, wearing a seat belt is without (financial) cost, not wearing one might (if caught) invite it.

An alcoholic’s seat belt is his alcohol – it makes him ‘safe’ and he cannot do without it – it has cost. Increase its price and he will still need it and it is indeed his family who will pay this price (as Dr No so accurately describes). It will be a cost that those who do not live with an addict can neither imagine nor appreciate.

I work with alcoholics and ex-alcoholics. Even now – before proposed minimum pricing – alcohol is the priority budget wise. ‘He’ will buy alcohol first and worry about cigarettes later – always a co-resident to be bullied to provide same. Residents (in care) have a very limited stagnant ‘pocket money’ income now – that is unless they are of the few who are NHS funded (their weekly disposable income is greater than mine – so much more to purchase alcohol with).

I dread to think of the ramifications in my workplace should minimum pricing become law – for an addict is an addict is an addict and I foresee increased violence. ‘His’ fellow residents and staff will pay the cost for the decreased value of his disposable income.

There are also the few near-end and end-stage alcoholics who are ‘medically prescribed’ their alcohol… Who will meet the increased cost for their alcohol?

Then there are of course some of my young colleagues who ‘binge drink’ as is the way of some young folk. They will not decrease their drinking just as they do not give up their fags every budget day – something else will be sacrificed or they will increase their credit card debt or use expensive short-term (pay day) loans. They will still binge drink.

Education on the risks of drinking is a good place to start – visit NHS Choices and notice that Korsakoff’s is not mentioned, rarely is anywhere... Perhaps educating the general public of this will have more of an impact than NHS Choices little list of undesirable effects.

That said my little binge drinking colleagues are well aware of Korsakoff’s – but it will not happen to them…

Serious education should begin at school level and that is education inviting discussion and not that of preaching – for we all know that when told not to do something – the likelihood is that we will…

I think that most of us are sensible drinkers – I am, although at times I might not be – depending on the occasion. I do not see why I should be penalised financially for those who are not.

Anna :o]

Clare - Your approach relies on Rose's Sick Individuals/Sick Populations notion, and as Dr No has said before, interesting though the idea is, it is still just an idea, a notion, a hypothesis. Despite looking far and wide, Dr No has never been able to find convincing empirical evidence to support it.

It is quite possible for the mean (or the nadir of a J shaped curve) to move downwards, while the tip of the long tail stays firmly tacked where it is. Does Scary Mary on Skid Row really know about Sensible Sally and her single glass of wine with supper? Is Mary really going to change her drinking habits because Sally has decided henceforth she will only have half a glass of wine with supper? Another way of looking at this is to ask whether we are all part of one continuous (and, perhaps rather spookily, interconnected) distribution, or whether in fact we belong to different distributions, with different characteristics.

'100 years of evidence...' - again, Dr No is not persuaded matters are so clear cut. Take price, and its first cousin, affordability (which is interesting - depending on which index is used, it may be that recent increases in affordability have been associated with a decrease in consumption): the awkward overall time trend in the UK over the last hundred and even three hundred years (see links in para 5 of the post) is that alcohol consumption has dropped as affluence (and so affordability) has risen. The Alcohol Establishment, of course, are wont to use only part of this graph, typically the last 60 years or so, which does conveniently show what appears to be an inexorable rise in consumption of epidemic proportions; but when one zooms out, and sees the longer picture, things start to look rather different.

Dr No has a hunch that perhaps the majority (the major minority exception being those who are beyond doubt physically addicted) of drinkers drink because, in the broadest meaning of the word, they are lonely (whether tackling that, if true, properly falls under the remit of medicine is another 'big question' which we wont go in to today). He can't possibly see how bumping up the price of cheap booze can possibly help - instead, he suspects it will just cause even more wretchedness...

This post is really about one single possible policy option - minimum unit pricing to reduce consumption and so alcohol related harm. The key flaw in the policy is that heavy drinkers have the lowest price elasticity (around -0.28, some studies suggest it may be even lower, compared to an overall elasticity of around -0.5): in other words, pricing policies least target the very people they are meant to target.

Or - to put in another way - the central fallacy in the '100 years of evidence' on alcohol and price is to focus on the overall relationship between price and consumption (which unsurprisingly, since most 'normal' consumption, including 'normal' consumption of alcohol, behaves this way, such that increases in price do indeed lead to falls in consumption), and in so doing, fail to see that the very sub-group we are most interested, heavy drinkers, are relatively - and indeed significantly - immune to the consumption lowering effects of price increases.

So Dr No continues to believe, for the reasons that he and others have given, that minimum unit pricing wont work, and will almost certainly cause unwanted and unnecessary harm and hardship; and so should be binned.

Man stares at bottle (see photo above) and thinks - 51p ........ GP bash-tards!!

There is always the danger that they will turn to cheaper, illegally brewed alcohol which may contain methanol or anti-freeze

A&E CN - Dr No did wonder about putting a caption on the photo: "Should have gone to SpecSavers..."(!)

Anon 6.20pm - Good point - another very predictable harm.

Addiction is addiction is addiction
Point is we need to shift the curve to stop the numbers being addicted
Harm starts well before addiction - it starts at problem drinking and is exponential
I am personally surprised that readers of Dr No's blog and Dr No are so against min pricing
Its a brave thing for Scot government to do and we should follow suit

As in smoking where 15% of incomes in SE class 5 are spent on cigarette taxes, a disproportionate amount of poor peoples money will be spent on this tax ( though the tax goes to the shop rather than government). So this tax is optional? Well we shall see who gets impoverished by the new puritans.

Little has been said of how the Hogarthian Gin lane ended. The major step was licensing of distributors, an evangelical and methodist revival movement and finally the introduction of licensing hours in WW1. Perhaps we should copy the successful tactics of the past rather than re-invent the wheel.

Time for a small Glenmorangie before bed. After all, I can afford a few units!

Boots

Further thoughts. If people can't afford alcohol, what will they do instead? Some may simply drink less alcohol but what will others do? There's a nice range of street drugs round here that compete nicely for price. Is cannabis psychosis cheaper to treat than Wernicke-Korsakoff? Is addiction to the benzos and morphine patches you bought in the hostel or by the lych gate of the church easier to fix? Glue, aerosols and coke compete well for price, too.

And what of the very heavy drinkers? Well, some of them will drink more and eat less and heat their homes less then at some point someone may spot they can get more money if they claim DLA. With higher rate care and lower rate mobility, they'll get over £10/day. 20 units of alcohol. Will they really bother terribly, terribly much that they can't afford more than that?

For those that will, there's always acquisitive crime. I wonder how drunk you have to get to no longer be able to rip a memorial plaque off and flog it to a scrap dealer or nick a bit of cheese and bacon from the Co-op and flog it to someone who can't afford full price?

Let's suppose that a minimum price will deter some people from drinking so much. Will it be the problem drinkers that it deters? Unpleasant to ask, but will it be those that are a problem for themselves or for others that it will deter?

And what is anyone going to do about the underlying problems that drove people to drink to excess in the first place? Will anyone offer counselling and practical support or will we just leave people to find an alternative drug without showing the shift in the stats?

I realise I sound hostile and negative. I just have met too many people with alcohol problems for whom the alcohol problem started out as - and maybe still is - the way they are tackling other problems. If you take away the alcohol, they still have those problems and will still seek a way of reducing their pain.

Since 2008 Hong Kong cut tax on wine to 0% from a once phenomenal 80% (yes).

Hong Kong had such surplus that every citizen resident or abroad gets 6000 dollars(400 UKP) last year.

It is now one of the world's biggest market for wine esp. Top French Bordeaux.

People drink red with fish and sea food.

Heart disease rate has dropped, my colleagues told me.

Perhaps the Cockroach Catcher should go home as soon I can collect a monthly sum for 5-aday fruits: 2 glasses of wine has more than 5 fruits, right.

'Point is we need to shift the curve to stop the numbers being addicted' - addicts are seldom cured until they decide for themselves they wish to be free of their addiction, in other words casting them as passive recipients of other people's wisdom is unlikely to be a formula for success (especially amongst drinkers at the 'pre-contemplation' stage).

A few extra pennies on a pint of heavy will not only not change the number of addicts but may do more harm by reinforcing a negative stereotype (amongst medics who support price increases) that some doctors are puritanical, interfering, and insufferable busy bodies.

It is the 'clockwork orange' question - are people fully human unless they are free to choose, even if they choose very badly, as young Alex and his droogs did?

Clare

“Addiction is addiction is addiction
Point is we need to shift the curve to stop the numbers being addicted
Harm starts well before addiction - it starts at problem drinking and is exponential”

A long, long time ago I was a ‘binge drinker’ – the only difference to now is that the term had not been coined then. I had my first drink in a pub at seventeen, later in my drinking career I was sometimes drunk, my friends and I sneaked quarter bottles of vodka into nightclubs (sensible re inflated prices), this of course after downing a few drinks in a pub before we ‘partied’ and I was, as my contemporaries, addicted to being a teenager/young adult and this my only ‘problem’.

I have spoken to my now adult children of their teenage/young adult years. They report that a long, long time ago they were ‘binge drinkers’ only the term had not been coined then. They had their first drink in a pub at seventeen, they sometimes were drunk, they sneaked quarter bottles of vodka into nightclubs… …you no doubt can guess the rest.

The ‘problem’ is that that is what (many) young people do (did you?) as they celebrate their entry into adulthood and for the majority alcohol does not become a problem. I would ask is this where harm starts? If so – only prohibition will resolve ‘the problem’ – although that doesn’t seem to work…

Some of course will become addicts and the reasons are manifold, it is not so simple as to label alcoholics as ‘self-medicaters’ for whatever stressors may present in life – although indeed this is a cause. Some imbibe for the sheer pleasure of being ‘merry’ and need more and more as time progresses to achieve this pleasurable state and thus become addicted.

As we know it is not the ‘poor’ who represent the greater part of those addicted – but it is surely the poor who will be penalized if minimum pricing is introduced, not “Those who know the price of their Bolly, if not their milk, will be unaffected, because the price of their booze already far exceeds the minimum price threshold.”

It is true that those residents (who eventually float to the great pub in the sky) in my workplace all had a work history, many of them professionals – indeed one a doctor, and perhaps it would be wise to address the underlying problems first (or at least as well) – is this part of the great plan? I would now refer you to ‘Can't think of a name(s)’ excellent comment.

I would also recommend you visit straight Statistics, perhaps focusing here, here and tag cloud re all alcohol posts.

Anna :o]

This is a rather stale thread.
I don't understand "Minimal Pricing", but I do understand the Government's desire to interfere and also the govenment's need to increase taxation so that it can waste even more money. I spend part of the year in Portugal. it is possible to spend more on better quality drink but the local supermarket does not sell any wine over €5.00 a bottle. Most is around €2-3. You never see drunks except for British holidaymakers. There are some local alcoholics. The Government's desire to interfere and control is the scary bit.

I haven’t quite figured out yet whether it is right or wrong to increase the price of alcohol and cigarettes in order to reduce drinking and smoking.
click here for details
This concludes that the rich can do whatever he wants and poor shall not have any fun.


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