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Minimum Pricing– autocratic, badly researched, regressive & unchallenged by liberals.

October 12th, 2012 Posted in Policy, pseudo science by

It seems that the increasingly weak case for minimum pricing for alcohol is being promoted mainly on the basis of “something must be done and this is the something makes us look best” by those to whom gesture politics is second nature. Sadly that category appears to include allegedly liberal democrats.

As someone who prefers to drink alcohol socially rather than at home I have to admit to having been intrigued and initially quite positive about the concept. It was only after reading most of the 500 plus pages of poorly explained, opaque gibberish produced by the University of Sheffield on the subject that I came to realise how bad an idea it actually is

The theory that has been heavily sold to the public by politicians and the public health industry, supported by the BBC , can be summarised as follows:

  • Alcohol is price elastic so increasing the price of alcohol reduces consumption and small acceptable changes produce big effects.
  • At risk groups including heavy drinkers, binge drinkers and young drinkers tend to consume lower cost products.
  • Increasing the price of lower cost products therefore targets “problem” drinkers
  • As only lower cost alcohol is affected the impact on moderate drinkers is minimal
  • It’s all good so people will support the idea.

The problem is that it isn’t this simple as I will attempt to illustrate using examples from the Sheffield Study. The Sheffield team admit that one weakness in their analysis is that there is very little UK data to work with. However, amongst the few studies that they cite are two that appear to undermine the price elasticity theory that is the basis for their model:

“Reviews of demand models from 1989 and 1990 in the United Kingdom found that the demand for beer, wine, and spirits was generally price-inelastic, with the demand for wines and distilled spirits being more responsive to prices than the demand for beer (Godfrey 1989 1990).”

It is logical that at some point, price affects behaviour but the idea that small changes will have big effects is extremely suspect unless you ignore common sense and evidence to the contrary:

“Chaloupka and Wechsler (1996) used a questionnaire approach to explore likely reactions to a tenfold increase in the tax on beer and found it would reduce binge drinking by young women by about 20%, but would have no effect on young men.”

They concluded:

“A substantial tax increase is thus required to achieve modest reductions in binge drinking by female students.”

 With respect to minimum pricing targeting “at risk” groups:

“Wagenaar (2008) found in his meta-analysis that price/tax also significantly affects heavy drinking (p<.01), but the magnitude of effect is smaller than effects on overall drinking.”

Manning et al (1995) derived a price elasticity response function with respect to drinking quantile, indicating that moderate drinkers are the most price elastic”

“One study found that modest increases in levels of taxes have no effect on the number of drinks consumed or on binge drinking (6 or more drinks on one occasion) (Gius, 2002)”

And from Gallet (2007)

“Moreover, if we are particularly concerned with teenage drinking, since we find that teens are least responsive to price, then perhaps the best approach to reducing teen alcohol consumption should involve alternatives to taxation, such as education campaigns.”

So there is some evidence from the Sheffield study suggesting that price increases do not target the groups the politicians say that they do and that it is somewhat speculative, without the benefit of hard evidence, to claim that because those groups currently consume a disproportionate amount of the cheapest alcohol that increasing bottom end prices will change their behaviour.

The Sheffield team do acknowledge some quite significant discrepancies between their model and previous work. Faced with the fact that their methodology produces results inconsistent with other findings for price elasticity in heavier drinkers they do provide an analysis that is consistent with the literature…

“To enable more direct comparability with the estimates in the literature we have also generated elasticity estimates for total alcohol purchasing from the EFS, shown in Table 11. These are in broad agreement with the literature, showing that  – at the highest level of aggregation – hazardous and harmful drinkers (combined elasticity of -0.21) are less price elastic than moderate drinkers (elasticity of -0.47).”

….but then ignore it.

 “Note that these high-level estimates are provided for reference only and are not included in the model.”

This is an extremely important aspect of the whole exercise because if price elasticity is lower for people who are heavy consumers, the result of minimum pricing will not be a reduction in their consumption but a significant increase in the amount they spend with attendant social consequences for them and their dependants.

The high level analysis suggests that heavy drinkers are less than half as likely to change their habits as a result of price increases but even that may be misleading because the Sheffield team lump “hazardous” and “harmful” drinkers together in the analysis placing a man who drinks a couple of pints each evening in the same category as one who consumes a bottle of brandy a day.

“Hazardous” and “harmful” together with “moderate” are entirely arbitrary non-evidence based definitions that are used in rather cavalier fashion throughout the Sheffield study and apparently in subsequent media interviews. According to the BBC:

“This would reduce levels of alcohol consumption by 10.3% among harmful drinkers – those who drink above the recommended limit of 4 units per day for men or 3 units per day for women”

It appears that either an error prone BBC journalist or the Sheffield team themselves have chosen to broaden the definition of “harmful” to include “hazardous” drinkers. It should be pointed out to those unfamiliar with bizarre WHO definitions that the inappropriately named “hazardous” group is defined by the absence of any symptoms /ill effects making it very different from the “harmful” group.

I believe that there is strong evidence to suggest that the neat analysis presented by politicians and the public health industry is extremely questionable and that the claims made for minimum pricing are based not on evidence but on speculation. Furthermore, I believe that there is credible evidence that minimum pricing is a regressive tax that will impact lower income consumers of alcohol at any level and will have potentially serious impact on families of heavier drinkers on low incomes.

The politicians have certainly failed to convince the public on this subject.  A perusal of comments on even left wing media such as the Guardian and BBC shows consistent public antipathy towards the idea. It is a heavy handed statist solution to what most people view as a social problem that is more in keeping with soviet style government than liberal democracy. I am not surprised that it is advocated by the Marxist public health industry and most ardently supported by those on the far left such as Nicola Sturgeon and Kevin Barron, but I am amazed and disappointed by the absence of either a social or classical liberal political challenge to an illiberal regressive law that like many similar interventions is doomed to failure and unforeseen negative consequences.

Dodgy expenses are not the only reason why people don’t trust politicians.

By Chris Oakley. Chris has previously posted on Liberal Vision:  Smokers-State Approved hate and Intolerance is UK policy,   Alcohol is Old News – Minimum Pricing for Digestives is the “Next Logical Step” , Soviet Style Alcohol Suppression Campaign Called for By Public Health Activists , Alcohol Taxation: The truth, the whole truth and nothing but the truth , A Liberal Tolerant nation?What hope is there for liberty if truth becomes the plaything of political lobbyists , Public Health Success? & Lies, damn lies, statistics &….

4 Responses to “Minimum Pricing– autocratic, badly researched, regressive & unchallenged by liberals.”

  1. Jess Says:

    Chris, Truly amazed that Europe seems to have scuppered the Scottish minimum pricing plan – at lest for the time being (though I note they seem hell bent on continuing to fight this one.)

    I am sick to death with campaigning academics that go through a research exercise clearly showing one thing and then twist the conclusions to say something completely different.

    I like the lib dem commitment to evidence based research, but worry that “evidence” actually means “campaigning academic/institution” on a mission to prove “x”. Evidence based policies only work if the “evidence” is reliable – which sadly, all too often, it isn’t.

  2. Henry Porter Says:

    You say in your blog

    “I believe that there is strong evidence to suggest that the neat analysis presented by politicians and the public health industry is extremely questionable and that the claims made for minimum pricing are based not on evidence but on speculation. ”

    I don’t think the claims made are based on “speculation”. The claims are a quite a cyncial desire to distort the facts. Politicians and academic institutions are in collusion.

    Politicians want to be seen to be doing something and need justification for their actions – “research” or “scientific studies” are a nice way to dupe / warm up the public for future policy action. The academics are frequently pursuing their own evangelical crusades (against smoking, drinking, etc etc) and only too happy to oblige the politicians. Even those that don’t have a personal interest in the issue – may have a financial one. Big problems mean big cash grants. If society accepted that smoking levels were at acceptable level and continuing to fall over time the £hundreds of millions that academic institutions and charity groups receive would dry up and they would be out of jobs.

    The only solution I can see is that people are actually wising up to the amount of “bad science” out there. This is good (and people like you are to be applauded for the work you do exposing it) . But is is bad because as Jess says “evidence based policy” is a good basis for making decisions – but those decisions are only as good as the evidence supporting them.

    Any other solutions Chris ?

  3. Chris Oakley Says:

    Thank you Jess and Henry for your comments. I do see signs that politicians are becoming increasingly aware of the need for evidence based policy and that is generally a good thing. However, policy decisions based on contrived or poorly researched evidence are arguably worse than those based on no evidence.

    I think that politicians need to take a serious look at the philosophy behind the evidence based approach. Are we really so obsessed with statistics that we are prepared to believe the counter-intuitive notion that heavy drinkers are more price sensitive than moderate ones because of some clever looking tables? Should we really be spending precious research funding on this kind of thing?

    I believe that the solution for government lies in greater transparency and above all the restoration of objectivity.

    Accountability is part of the solution for academia and not only in public health. There are people currently in senior posts at UK universities who have produced arguably fraudulent and certainly academically questionable subjective output with impunity.

    A large part of the problem for which I can offer no solution, other than to keep making my own minor contribution, is the biased and uncritical coverage of issues such as public health by the mainstream media in general and the BBC in particular. At times, the BBC appears to be a PR company for favoured campaigners and I suspect that hell might freeze over before it criticizes the medical establishment.

    It is hardly surprising that policies such as minimum pricing gain traction amongst politicians when an organization as important as the BBC can be reasonably argued to, at the very least, have regularly and uncritically reported pretty much anything that has been supportive the idea.

  4. Ed Joyce Says:

    Minimun pricing per unit on alcohol is a way for the tax burden to be shifted from the wealthy to the poor. If this was about cutting alcohol related problems tax rises would be applied on a percentage basis to all alcohol. Ed