Monday, 2 March 2009

Booze and price: the evidence

Is there a scientific relationship between the price of booze and its consumption? I ask because during a radio discussion on the Scottish Government's proposals to introduce a minimum price for booze, an expert insisted there was.

This intrigued me, as I thought the picture was far more mixed than he was admitting. Certainly there is some support for his view, such as this one which highlights that there is indeed a reduction of consumption when the price goes up.

But that only relates to overall consumption. This study suggests that increasing the price of booze will have little impact on binge drinking. This one, meanwhile, suggests there is a gender difference between men and women, with men being far less affected by price changes in terms of their binge drinking than women are, although for both the demand for booze is relatively inelastic. It should be noted that the study is of college students only.

Let us assume that all three studies are accurate. What conclusions can we draw? Well, the most obvious one has to be that raising the price of booze will reduce overall consumption of alcohol - but mainly for moderate drinkers and women. Male binge drinkers are less likely to respond to price signals.

Indeed, the evidence that price does little to affect binge drinking is quite significant. As the ever-reliable Wikipedia notes, there is a tradition of binge drinking in Scandinavian countries, despite the historically high prices and restricted availability of alcohol. In southern Europe, by contrast, binge drinking is much less common, despite the relative cheapness of alcohol.

That's why today's proposals from the Scottish Government are largely irrelevant to the issue of tackling Scotland's drinking culture. Yes, the introduction of minimum prices will certainly have an effect on consumption, but only at the margins. And it's unlikely to do anything to tackle the uncomfortable fact that too many people in our society drink to get drunk. Until people learn how to drink responsibly, laws on booze are not going to make much difference. And we are currently a long, long way from that.


Stephen B said...

Given that we're talking about the principle of price elasticity of demand here, I assume that, given the same principle underlies much green taxation, a full discussion of its unsuitability would follow attempts to impose said green levies?

The interesting thing about price elasticity of demand is that it postulates that, in most circumstances, people will substitute one product or service for another when they feel that the original has become too expensive. In the case of booze, this could mean smuggled imports (Tesco in Berwick must be rubbing their hands with anticipation for example) or people resorting to dodgy homebrew experiments.

Speaking of which I have a vile smelling brew fermenting under the stairs at the moment which you are welcome to sample in about 3 weeks time if you wish.

Frank H Little said...

It seems to me that it is the availability of alcohol, not its price, which is the trouble. It might be more to the point to restrict the sale of intoxicants to outlets whose primary business it is. (I have been told that this is the case in some Canadian provinces, but unfortunately cannot find a WWW reference.) Restore the pubs and the off-licence! Of course, this would not be liked by the supermarket chains.

It will be interesting to see how the Scottish government move works out. If it succeeds, then I hope it will be extended to the rest of the UK, but I have the same doubts as yourself.

John B said...

But if you're going to restrict availability, then banning supermarket sales is the *worst* way to go about it - the way in which people buy booze in the supermarket is to stock up, in advance, in a relatively sensible fashion, as part of their weekly shop.

To deter bingeing (note: I don't think there's any need to deter bingeing), you should ban sales in corner shops, convenience shops, high streets and neighbourhood off-licenses, and *restrict* sales to supermarkets.

Frank H Little said...

John B, I should have made myself clearer - yes, I would certainly include convenience stores and corner shops in the ban. In fact, these are probably the worst offenders in selling cheap cider and lager in our part of the world to yobbos who make a nuisance of themselves in public spaces in our part of the world.

The key point is that the seller should have responsibility and experience in the sale of alcohol.

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