Some words on alcohol Minimum Unit Pricing

Another WSET assignment = new post!

This time we were asked to talk about Minimum Unit Pricing on alcohol by taking inspiration from the following articles

It is very difficult to make a research on these topic, because, as long as I could read, many sources will have a vested interest in the topic or an ideological bias, meaning that an author will first determine his position and then search for proof supporting his view.

We can find two different approaches supporting minimum alcohol prices, one theoretical and one practical: one bases its assumptions on the Sheffield Alcohol Policy Model, the other brings examples where some kind of price regulation on alcohol has been applied and successfully reduced alcohol related harm.

The Sheffield Alcohol Policy Model is a mathematical model claiming to be able to precisely evaluate the effects of minimum alcohol price on alcohol consumption and related disease, which is believed to be very tight. In its application on the Scotland case for example the authors maintain that, looking at the overall population, a minimum price of 40p per unit will exactly save 29 lives in the first year, reducing violent crimes by 3000 and days of absence from work by 9.5 days (page 138). The model assumes that heavy drinkers will reduce alcohol consumption when prices rise, for they will always tend to buy the cheapest booze possible (they don’t drink to taste, they just want to get drunk) and that higher prices will reduce consumption. The model has been extensively used by the proponents of minimum alcohol pricing and is more or less the base of Dr. Sarah Wollaston reasoning.

The example of Canada on the other hand look at the experience of this nation: in British Columbia, a 10% increase in average minimum prices in the last 8 years has led to a 3.4% decrease in alcohol consumption and a 9% drop in alcohol related hospitalization. In Saskatchewan the same increase caused a 8.4% fall in consumption and an alleged significant shift to lower alcohol drink.

Science and evidence thus support this kind of policy? Not exactly.

The Sheffield Model has been widely criticized for some of its implied assumptions . This commentary is especially illuminating. First of all there is evidence that a person dependent from alcohol will not stop buying booze when the price rises, but just shift to cheaper drinks. Second, the availability of alcohol on the market is not necessarily related to volume of consumption: the author brings the example of France, where people are drinking less and less, even though quantity on the market has not changed.

Moreover the model does not take into account factors like illegal alcohol production and trade which could thrive if the legal market is limited or the indirect effect that another tax would have on poorer households. Data sources are also questionable, for adjusted figures based on the English market are used to make forecasts in the Scotland society, not very correct for a model which tries to predict the number of lives saved by MUP to the single digit.

Finally, the model does not consider that alcohol consumption in the UK has already decreased from 2006, the year from which the data where sourced, by 17.5%, even though none of its beneficial effects has been reported so far.

The example of Canada on the other hand is not that relevant when applied to other societies because the relation between price, per capita consumption and harmful consumption is far from being clear and uniform over different countries. The I already cited France, but we could look at the case of Denmark, whose decline in alcohol related problems coincided with a reduction by 45% the tax on spirits in 2003. It is also curious to see that, according to WHO statistics, tightly regulated Canada has an higher per capita consumption of alcohol than relaxed Italy and Japan which makes me wonder if the problem lies more on a cultural plane than in the pocket of the consumer.

It seems thus that not much is supporting the minimum unit pricing position: a flawed model and contrasting evidence are not enough to back such policy.

For all these reasons, if asked by Japanese government on the topic, I will not encourage any additional price policy: besides the highly unpredictable effects it could have, the timing could not be worse because, as I reported above, alcohol consumption is already decreasing and sales tax, which jumped up from 5% to 8% in April 2014, is already destined to rise again in 2017 to 10%. Adding further burden to already worn out consumers will mean pulling the rope too much.

Moreover alcoholic drinks are not that cheap in Japan when compared to countries where MUP has been introduced, primarily because of sustained levels of existing liquor excises and custom tariffs.

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