Having a minimum price on alcohol is a crap idea


9:45 am - June 3rd 2010

by David Semple    


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I’m glad to see the Conservative government is opposed to a minimum price law on alcohol. As I said last time this issue came up, I am opposed to such a law on the grounds that people should be allowed to drink to excess if they wish.

The issue has recently flared up because Tesco came out to support a minimum pricing system, and because NICE has subsequently also come out for a minimum price per unit of alcohol.

What few enough people noticed when Tesco came out for the law is that this view is self-interested; it will mean they no longer have to worry about cutting prices.

To give an example of how this work, Professor Anne Ludbrook, one of the authors of the NICE report, said the following:

“At the example price of 50 pence, a bottle of vodka would be just over £13. Whereas in the supermarkets currently you could find vodka selling at below £8. Cheap white cider, for example, would go up to over £7 a bottle. It’s currently selling at about £2.” [BBC]

Self-interest beats outright misinformation, however, which is where the drinks industry have put their faith.

Simon Litherland of Diageo GB said: “Yet again it is disappointing to see continued support for minimum pricing despite no credible empirical evidence that it would be an effective measure in reducing alcohol-related harm.”

Andrew Opie, food policy director at the British Retail Consortium, said: “It’s too simplistic to say the UK’s alcohol problems are down to price. Irresponsible alcohol consumption is primarily a cultural issue that needs to be addressed through education and information.”

There is evidence, from studies prepared for the Scottish Parliament, as it debated minimum pricing laws that a) price increases do correlate to decreased demand, b) that binge dringers, young drinkers and harmful drinkers all choose cheaper drinks and will be hit by minimum pricing laws and c) that increased taxation and prices do reduce harm.

All of which escapes the point I raised the last time, that the people who are likely to be affected by drinks with an enforced minimum price will be poor people. We don’t routinely tax or look down upon any number of practices which cost the NHS and other social services money. Why should alcohol be different?

If it is the social effects of binge drinking we want to combat, then challenging the culture that our cities inspire with ever decreasing number of social places except pubs would be a start. So would challenging the culture of silence around things like domestic violence, or educating people in safe practices to protect against rape.

Meanwhile, NICE can get off their high horse, from which they claim that alcohol consumption problems, including 15,000 direct deaths, cost the NHS £2 bn per year. Which is awesome, because the taxes levied on alcohol bring in well over £5 bn per year.

If the government wants more revenue, to devote to social purposes like making our cities sociable once more, they can get it from the breweries, and end the monopolistic practices which drive our pubs to seek high-turnover rather than a social clientele.

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David Semple is a regular contributor. He blogs at Though Cowards Flinch.
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Reader comments


It’s illegal under European competition law as well. Germany and Scotland have tried it on with booze, Ireland have tried it with fags – this is the response:

The Commission takes the view, based on well established case law of the Court of Justice of the European Communities, that such prices infringe Community law, distort competition and benefit only manufacturers, by safeguarding their profit margins.

Whether you agree that European law should take precedence over national law, there’s no practical question that it does, and that therefore discussions over a minimum price for alcohol are an entirely irrelevant and unrealistic sideshow.

2. Grrumpy Old Man

Sweden has some of the most draconian laws on alcohol consumption in Europe.
result? in 2001, it was estimated that over 50% of alcohol consumed in Sweden was either smuggled or homemade. If a democracy makes an upopular law, the electorate will ignore it.

3. Luis Enrique

When you write things like “challenge the culture …” what actual tangible things do you have in mind? Are we “challenging the culture … ” now? How will we know when we are? What does “challenging the culture … ” consist of? Please give some examples and explain what effect you expect these examples to have on problem drinking.

If the government wants more revenue, to devote to social purposes like making our cities sociable once more, they can get it from the breweries, and end the monopolistic practices which drive our pubs to seek high-turnover rather than a social clientele

I can’t make head or tail of that. For are start, there’s not really a difference between taxing alcohol at retail and applying some special tax to breweries. And how do these “monopolistic practices” drive our pubs to seek high-turnover rather than a social clientele? What do you mean by “high-turnover” – people who spend lots of money? And presumably “social clientele” are people who don’t and sit there nursing a pint all night. And you think that if the pub industry was more competitive (less monopolistic) pubs would be under less pressure to attract customers who spend money? I think you are mistaken.

(plus, can you really claim that our cities are less “sociable” than they were? I can’t say I’ve noticed. I know that pubs are closing, which is largely explained beer is so much more expensive in a pub than a supermarket. Is that what you mean?)

I think you’re wrong.

Culture is very difficult thing to shift. We tried to stop binge drinking by getting rid of the 11pm drinking deadline – it’s worked to an extent, but we still have city centre no-go areas. You’re asking for the expectations and habits of an entire generation, used to “living for the weekend”, to suddenly change so they stop getting paralytic on a Friday and Saturday night. That’s not going to happen, because that’s what people CHOOSE to do. They don’t want alternative non-booze hobbies, and anyone who does can easily find quieter cafes, bars and restaurants.

I think you also have a middle-class perspective on it. People are not getting paralytic in pubs and clubs. It’s too expensive. What they’re doing is drinking 8 cans of cheap supermarket lager, or a bottle of cheap supermarket vodka, even before they go out. They’re pissed before they start! Without the cheap booze from the supermarket, they wouldn’t suddenly decide they don’t want to go to a pub and club for casual sex and a kebab. They’ll still want to go dancing to bad R&B and house choons.

But they might, at least, go there without having been tanked up at home first.

If there was an equitable price between pubs and supermarkets, there’d be two big positives:
1. Our valuable pubs wouldn’t have to compete with the stay-at-home market at both the chav end and the casual drinkers, who might choose to have friends over instead to save a fortune.
2. The people who currently get tanked up before hitting the clubs would have less incentive to do so, they’d be starting to drink later instead of when they’re getting ready and can would likely drink slower once out in the social situation.

“We don’t routinely tax or look down upon any number of practices which cost the NHS and other social services money. Why should alcohol be different?”

I dispute that; the government already applies VAT to things like sweets, chocolate, crisps and takeaways. VAT is not applied to PE/sports education, activities & related services. Smoking cessation products are only subject to 5% VAT whilst tobacco products themselves are subject to both VAT and duty, and so on. If other recreational drugs were legal, they’d probably be subject to VAT and duty too.

Has anyone considered that people drink alcohol, drink alcohol to excess and binge drink because they enjoy it and it’s fun?

That, for many, drinking brings a few brief moments of meaning and excitement to lives that would otherwise be irredeemably drab and mundane?

That, providing they do not interfere with anyone elses enjoyment or break any law, what they drink and how they drink is a matter for each individual to determine for themseves?

And those people who are currently paid vast chunks of taxpayers money to inhabit fake charities, quangos and medical pressure groups and tell us what restrictions on our behaviour would be good for us.

Has anyone considered that the world would be a happier and more prosperous place if their parents had never met?

pajar: “That, providing they do not interfere with anyone elses enjoyment or break any law, what they drink and how they drink is a matter for each individual to determine for themseves?”

I agree with you to a point. But walk along West Street in Brighton, or similar streets in any other town, on a Saturday night at 11pm and tell me that the terrifying behaviour is not breaking laws and interfering with other people’s enjoyment of the city centre….

The behaviour is a direct result of binge drinking.

Sorry, pagar. Apols for misspelling your name.

I still fail to see a relationship between alchohol pricing and binge drinking – as the latter is not about rational consumer decisions, but rather about a decision to go out and drink excessively, which by definition (and experience) will involve minimal concern about prices – otherwise why do so many people drink in clubs?

Alchohol pricing will rather hit overall consumption, or at least legal consumption (as noted at 2 above, excessive taxation effectively benefits crime), and that will be those who chose to drink in a rational manner (or at least those not binge drinking at that time). Apart from cutting the amount of alchohol they purchase, and perhaps pricing alchohol out of the reach of the poorest (or food out of the reach of alchoholics…), does not this actually risk increasing the occurence of binge drinking? As people have less relative income to spend on alchohol, it gets saved for particular occasions. So for people like me, who like a big night out (albeit I do not get into fights or the like) I will sacrifice the odd quiet drink after work or at home, and still drink recklessly. Which actually produces a more extreme drinking culture…

As Dave says, a silly idea. And one that seems to be confused as to how rational consumers of alchohol will be after a few drinks. Still, quangos and monopolistic corporations are not likely to be the source of the best ideas in the world really…

Pagar, can I suggest you google the word “externalities”?

Then google “externalities of excessive alcohol consumption”

There’s a difference between drinking on a night out and binge drinking. People drink in clubs to get drunk and have a good time.

Binge drinking will be curbed if people can’t afford it. It’s a simple logical connection. If you’ve only got £20, you can only buy five drinks instead of a entire crate of supermarket lager.

Will it stop people getting drunk? Nope.
Will it stop people getting paralytic, rowdy, aggressive and violent? It’s worth a try.

Aside from booze, I have a fundamental opposition to ANYTHING being sold at less than the price it takes to produce. That’s why our dairy farmers are being screwed.

I have a fundamental opposition to ANYTHING being sold at less than the price it takes to produce

Where did you get your mobile phone from?

13. Luis Enrique

This isn’t really relevant to the OP but … when something is sold at a loss, who is taking the hit? it is quite possible that a retailer may decide to sell at a loss while the supplier of said good is making a handsome profit. Conversely, retailers can make a handsome profit while suppliers are selling at a loss. It’s not so obvious that the retailer deciding to sell at a loss causes the supplier to sell at a loss too (the diary industry). The real reasons why situations in which suppliers find themselves selling at a loss most likely lie elsewhere: over-supply combined with lack of pricing power (a commodity product) and some reasons why producers choose to tolerate an operating loss rather than just closing up shop.

The real reasons why situations in which suppliers find themselves selling at a loss most likely lie elsewhere: over-supply combined with lack of pricing power (a commodity product) and some reasons why producers choose to tolerate an operating loss rather than just closing up shop.

Loss leaders, providing a below-cost article that requires a full-price service (how much did your sky satellite box cost you? What about your broadband modem?), clearing stock, liquidation sales, selling some items below cost to encourage enough throughput to cover your losses on other goods – there are a hell of a lot of good solid business reasons for selling certain things below cost.

Then google “externalities of excessive alcohol consumption”

OK Planeshift.

I would have thought the duty on the massive quantities of alcohol I consume would have more than covered the bill, but if I were to sign a form stating that I don’t want NHS treatment for the consequences of my lifestyle choices, would the fascist do-gooders leave me alone then?

Thought not.

Rick,

“There’s a difference between drinking on a night out and binge drinking. People drink in clubs to get drunk and have a good time.”

Yes. And you’ll find that those drinking on a night out drink less to allow more for binge drinking. The big night out is culturally ingrained in many remember.

“Binge drinking will be curbed if people can’t afford it. It’s a simple logical connection. If you’ve only got £20, you can only buy five drinks instead of a entire crate of supermarket lager.”

Binge drinking happens the most just after payday. I wonder why…
Your logic is assuming a high degree of rationality, but after five drinks are consumers that rational, or will they get out the card for the next round because they are having fun. Economists generally are happy to admit that humans are not always rational, which is why their models are so complex.

“Will it stop people getting drunk? Nope.
Will it stop people getting paralytic, rowdy, aggressive and violent? It’s worth a try”

Maybe. I thought we had laws against the last three states though. Shouldn’t we use those instead – you know, penalise the criminals,not all of us?

“Aside from booze, I have a fundamental opposition to ANYTHING being sold at less than the price it takes to produce. That’s why our dairy farmers are being screwed.”

They are selling it at less than production? More fool them. Or do you mean the supermarkets (which generally aren’t – they make their profit on staples)? Still, any sort of price control is generally flawed, so not sure how you’d enforce a minimum price linked to a variable cost.

“The behaviour is a direct result of binge drinking.”

No, it is a result of such drinkers being twats. When I get drunk I don’t make a nuisance of myself. I tend to gabble more and talk a bit louder but I always make sure I don’t pester people I don’t know.

Richard,

Careful. You may imply that the sort of person who gets aggressive and irritating when drunk is likely to lack certain social graces when sober as well…

Hang on, wouldn’t that mean the solution to violence and abusive behaviour due to alchohol was to tackle those who are violent and abusive, and to try to ensure children were educated as to how to function without feeling the need to use fists or insults. Which would kind of imply learning personal responsibility, rather than assuming the government will fix everything through alchohol pricing schemes…

You’re absolutely right, of course. We have laws that simply aren’t being enforced, not least it being illegal to serve more drink to a drunk person.

I still think a minimum price is a good idea, binge drinking being only a part of it. The effect on pubs of supermarket price wars has been disasterous.

20. Luis Enrique

Tim J,

yes, when trying to seed a new market etc. But while Sky might be happy to sell its boxes at loss to win subscriptions, the supplier that makes the boxes is less likely to want to, unless it too is pursuing a short-run tactic to win contracts. Selling at a loss is not a long-run business objective, unless it is effectively cross-subsidising something else (like a supermarket loss-leader).

I didn’t make this clear, but I was writing about situations where the suppliers are selling at a loss against their wishes, as is said of the UK diary industry, and how that might arise, because I was responding to Rick’s idea that it’s about suppliers being screwed.

@ Rick

But walk along West Street in Brighton, or similar streets in any other town, on a Saturday night at 11pm and tell me that the terrifying behaviour is not breaking laws and interfering with other people’s enjoyment of the city centre….

I regularly walk along Matthews Street in Liverpool and see hundreds of youngsters having a great time. I don’t find their behaviour terrifying and my reaction is not to want to stop them.

If you don’t like West Street on a Saturday night you could always stay in and watch Casualty.

No need to scare yourself.

pagar: I believe you’re trying to make out that I’m some sort of fuddy-duddy who just doesn’t like people having a good time. In fact there are plenty of bars and nightclubs I’m happy to go to in Brighton, once where fighting and vomit aren’t the mark of a good night. But I and everyone else I know avoid the ones on West Street, which is aptly named as it’s more like the Wild West than a seaside town. I can’t comment on Matthew Street, it’s a long time since I’ve been out in Liverpool.

“If you don’t like West Street on a Saturday night you could always stay in and watch Casualty.

No need to scare yourself.”

I’m pretty certain that a lot of those opinionating nationally on this subject actually get their knowledge from watching Casualty…

“Has anyone considered that people drink alcohol, drink alcohol to excess and binge drink because they enjoy it and it’s fun?”

Quite. And we can even put a value to that enjoyment. People hand over the cash for the booze because the enjoyment they get from the booze is worth more to them than the cash they’re handing over.

This is a simple truism about any voluntary transaction.

Thus the value to boozers of booze consumption must be at least the amonth that boozers spend upon booze.

Somewhere north of £50 billion a year I think that is. The benefits of the actions are higher than the costs. Thus we don’t in fact have a problem.

25. Luis Enrique

Tim W,

by that logic, problem drinking cannot occur so long as the transaction in which alcohol is purchased is voluntary. I happen to have just seen a family friend descend via chronic alcoholism to suicide, I think you need to amend your position somewhat.

I’m sure if Charlie Fairhead was in charge, we wouldn’t have any of these problems.

There appears to be a libertarian view that this is some sort of incursion on freedom. No-one has a right to buy crates of lager for a fiver.

But as a society we have a responsibility to the safety and well-being of citizens – I don’t mean saving people from themselves, I mean saving the rest of us from them. If binge drinking was about groups of people who were drunk but kept to themselves (as I and others on this thread have been), we wouldn’t have this conversation. But it isn’t, it’s about no-go city centres and violence, it’s about drunken behaviour causing problems to other people.

And yes, this has to go hand-in-hand with education, poverty reduction and an attempt to raise aspirations and values beyond getting pissed up being the only thing worth living for.

I’m well aware that this thread is also a largely middle-class perspective, where drinking isn’t necessarily an escape and drunks are not the sort of people who start random fights. And yes, I know people personally who’ll start with “What are you looking at?” and then punch a stranger.

@ 25….someone just died climbing Everest. Does that mean that those who climb Everest don’t value doing so?

No, it doesn’t, it still leaves us with the value of something to those doing the doing must, by definition, be higher than the cost of their doing so.

“we wouldn’t have this conversation. But it isn’t, it’s about no-go city centres and violence, it’s about drunken behaviour causing problems to other people.”

We already have lots of laws about all of that. Enforce them.

Rick,

“There appears to be a libertarian view that this is some sort of incursion on freedom. No-one has a right to buy crates of lager for a fiver.”

No. And libertarians would not argue so. We would argue that anyone who possesses crates of lager has a perfect right to sell them for a fiver should they so wish, and that then anyone who wants could buy them. But the right to cheap alchohol does not exist; the right of government to dictate at what price I sell my own possessions (if they are legal for me to sell, and if I pay any required taxes) is indeed an infringement (not incursion – that’s a military term) on freedom.

And if you are concerned about alchohol pricing driving out crime, how does encouraging a smuggling/bootlegging industry actually solve the problem of crime. It just makes it more professional, and to judge from the extreme example of prohibition, more dangerous.

If we have laws, and the problem persists, then something is wrong.

How would you go about enforcing the laws so as to remove the problem?

Watchman – I’m not convinced it would be a boon to smuggling and bootlegging.

There are also plenty of products where there’s effectively a minimum price, else you’d see single fags being sold in newsagents, or packets of 20 for a quid.

No-one has a right to buy crates of lager for a fiver.

If someone wants to sell a crate of lager for a fiver and I want to buy it for a fiver, nobody else has the right to prevent the transaction from taking place.

It’s called……err……..freedom.

There are also plenty of products where there’s effectively a minimum price, else you’d see single fags being sold in newsagents, or packets of 20 for a quid.

And your point is?

34. Luis Enrique

Tim are you really telling me that the “value” to this chap of drinking him self to death, become estranged from his family, destroying his career, crying endlessly, saying how desperately unhappy he was all the time, was greater than the “cost” he incurred? Don’t be daft.

Clearly a prerequisite for the argument: “People hand over the cash for X must be getting more enjoyment from X than the cash they’re handing over” and variants thereof, is that people are acting rationally and in their own self interest when conducting voluntary transactions.

Now, is that really the right assumption to bring to the question of alcohol consumption?

I’m more used to groaning at left-wingers mangling “economic” logic, but you’re doing the profession no favours here. Note to everyone else: economics is smarter than this!

pagar: I disagree on that point, because all rights are balanced with responsibilities. If it’s irresponsible to sell a crate of lager for a fiver, then you don’t have the right to do so.

36. Luis Enrique

There are also plenty of products where there’s effectively a minimum price

yes, as a rule it’s know as the “cost” (or, cost plus margin plus taxes)

37. the a&e charge nurse

[15] “would the fascist do-gooders leave me alone then?” – come on Pagar, you can do better than that.

Not all externalities associated with alcohol can be reduced to simple numbers, or a financial cost.
An inadequate young man (say) tanked up on booze waving a broken glass around is more than just a danger to himself – same for a pished-up middle aged boozer who thinks it’s OK to drive the car home after a heavy sesh in the pub.

For example, one investigator (Prof Sheperd) claims, “we found that only 23 per cent of accident and emergency cases where people were treated after all attacks were recorded by police. We also found that 7 out of 8 violent incidents on licensed premises such as pubs, bars and clubs DID NOT appear on police records”.
http://www.cardiff.ac.uk/125/getinvolved/mycardiff/100408.html

Is it really fascistic to consider measures that might counter-act these predictable, and perennial alcohol related catastrophes?

I’m not saying pricing is the best or only option but I can understand why some are looking at it – or do we start only moaning after we have been personally affected?

Rick,

“Watchman – I’m not convinced it would be a boon to smuggling and bootlegging.

There are also plenty of products where there’s effectively a minimum price, else you’d see single fags being sold in newsagents, or packets of 20 for a quid.”

So I’ve never been in a pub (look – despite the impression on this thread, I do not spend all my time at bars…) and been offered smuggled cigarettes then? It’s quite a common experience, and I’d have thought more so down in Brighton (nearer the continent). You are restricted by law as to what measures of cigarettes you can sell (individual cigarettes were banned to stop children smoking – that worked!), and cigarettes are indeed given a minimum price by tax; hence the fact there is a large black market in tobacco…

If anyone wants an example of economic reasoning at its most stubbornly ideological and grossly simplistic, Tim’s comment provides it.

People simply do not reason in that way. At least they often do, but not invariably so, definitely not where drug-addiction is involved, and certainly just not by pure definition of the terms, as Tim claims. Only by using words like “value”, “enjoyment”, and “voluntary” in totally unrecognisable ways can that sort of reasoning stand.

(NB I oppose the minimum pricing plan.)

Is the market for tobacco smuggling really that big? I know lots of smokers, they can’t be bothered buying bootlegged fags. I see them around, but I don’t have figures beyond anecdotes so I’d be interested to see them.

I tend to believe most people prefer paid convenience of free black market. Why do they use iTunes when they could download for free?

So even if a market in smuggled booze does develop, would it be as big as or even close to the market for shop-bought, slightly more expensive booze? I doubt it.

Prohibition is a special case – there’s no legal and convenient alternative, so people will use the black market, as in the case of drugs. But if you could buy decent cocaine from a shop for £60 a gram, or go to your dealer for £40 a gram, I think the majority would use the licensed shop.

41. Luis Enrique

Tim W read @39. see what you’ve done? Larry, read my @34, that’s not “economic reasoning” – few economists would assume rationality in this setting.

Rick,

My point is that you are giving criminals a window in which to operate and that is wrong. If you are prepared to accept a certain level of extra crime (gangland smuggling) as a result of a policy which in your eyes seems to be designed to deal with crime (anti-social behaviour) then that seems consistent. I have however set out my objections to assuming that higher alchohol pricing will hit the anti-social behaviour in the first place, hence our disagreement.

I also worry about swapping disorganised crime for more organised crime which also removes money from tax revenues. It just seems ill-thought out to me…

@40

Is the market for tobacco smuggling really that big?

From purely anecdotal and personal experience, it used to be. I could list about 7 or 8 shops within walking distance from where I type where I was able to buy 50g of tobacco for £5 (legally it was £10-£13) a couple of years ago. Seems to have dried up now though since the gov & police started cracking down, although every other week there is a story in the local press about another bootleg tobacco holding pen being found and shut down (usually the backroom of a pub etc).

On-topic though, I can’t see the price-fixing of booze working at all. If people want to get off their heads then they will, by any means necessary, and seeing as speed and mdma are ridiculously cheap more people might end up taking those.

C’mon – I said “economic reasoning at its most stubbornly ideological and grossly simplistic”, and it is that!

Don’t worry, I don’t hate economists. I count myself better informed and well disposed towards economics than most around these parts – not hard, you’ll say!

“If it’s irresponsible to sell a crate of lager for a fiver, then you don’t have the right to do so.”

Why is it irresponsible? How do they know the person buying the laga will get tanked up and go on a drunken rampage? It may well be a perfectly civilised gentleman who likes a bargain.

“Why do they use iTunes when they could download for free? ”

They’ve obviously never heard of Bitorrent.

@45

“Why do they use iTunes when they could download for free? ”

They’ve obviously never heard of Bitorrent.

🙂

Also though, there is a quality issue: if you illegally download you don’t know what quality mp3 you’re going to end up with, or whether it has viruses attached etc. same as illegal cigarettes and tobacco, sometimes they’re mixed up with all sorts of poisons (more than usual, I mean). and of course the risks involved with moonshine are well known and documented.
Legal goods are a guarantee of quality; insofar as you can get your money back if you’ve been ripped off. It’s hard to go to a dealer and say “Erm, this coke isn’t quite up to scratch, old boy” (unless you’re at Oxbridge, I imagine).

“Tim are you really telling me that the “value” to this chap of drinking him self to death, become estranged from his family, destroying his career, crying endlessly, saying how desperately unhappy he was all the time, was greater than the “cost” he incurred?

Revealed preferences.

Yes, to this bloke the value of continuing to drink was higher than the value of not drinking. For that’s what he did, see?

“Yes, to this bloke the value of continuing to drink was higher than the value of not drinking. For that’s what he did, see?”

Worstall in circular argument shock.

@40.

1999 figures from The Guardian:

“Seventeen billion cigarettes (20% of the market) will have been
smuggled into the UK and bootlegged this year. Eighty per cent
of the hand-rolled tobacco smoked in this country has been
smuggled.”

“Is the market for tobacco smuggling really that big?”

Err, yes.

50. Chris Whitrow

I totally disagree. Whilst I’m very much in favour of personal liberty, the freedom to ‘drink to excess’ is not one of those worth protecting, any more than, say, the freedom to drive like a total tit. People have responsibilities not only to themselves but also to others.

Public drunkenness is a real problem which doesn’t just cost the NHS a huge amount of money, but also impacts on everyone’s quality of life. Binge drinkers routinely get tanked up on cheap alcohol from supermarkets before heading out to get even more hammered in town centre bars. Alcoholism fuels domestic violence, road traffic deaths, crime, antisocial behaviour, family breakup and violence generally. In turn, cheap, low-quality booze feeds alcoholism, as well as binge drinking.

Taxation doesn’t work, because brewers and supermarkets will always be able to create ever cheaper, lower quality booze to shove down people’s throats. This is the stuff that appeals specifically to alcoholics and others who just want to get wrecked – they don’t drink it for the taste or to be sociable. Now, I quite like a drink and I drink regularly but moderately, and partly for the taste. Responsible drinkers should be completely unaffected by minimum pricing, as the price should be set purely to make poor quality booze economically unviable. In other words, minimum pricing would target the ‘let’s get wrecked’ culture with pinpoint accuracy. It would also automatically put an end to drinks promotions like ‘happy hour’ and the totally irresponsible policy of literally pouring liquor down punters throats for free which I’ve witnessed in big town-centre bars aimed at young weekend revellers.

51. Luis Enrique

Tim W

Go back to your text books and revise the assumptions required for the theory of revealed preference to make sense. If the assumptions do not hold*, the theory does not apply. There is no natural law of the universe here, these assumptions + theory need not provide a true account of human behaviour in all settings. You are not presenting a purely abstract logical argument here, we are talking about the real world. I’d be amazed if Samuelson, the originator of the theory of revealed preference, would have said it was applicable to alcoholics. Doesn’t that give you pause for thought?

To insist that somebody who destroyed their life through alcohol abuse was getting more value from drinking than he would have done through not drinking, just makes you look ridiculous. I am surprised you are making such a fool of yourself, you don’t normally.

* or are not either reasonable approximations or incidental to the result

Tim, here’s some homework for you. Go and talk to a suicidally depressed, bankrupt, chronic alcoholic. Ask him if he thinks the “value” he gets from drinking exceeds that he would get from giving up. Ask him if the “enjoyment” he gets from the booze is worth more to him than the cash he hands over.

And then, once he’s finished smashing your thick skull with a whiskey bottle, come back here and explain why we should take your word on what people consider “valuable” or “enjoyable” or “worth” something, over and above what people themselves say and adamantly believe.

Larry @ 39

People simply do not reason in that way. At least they often do, but not invariably so

And this gets to the point of the argument. Who is responsible if the reasoning is irrational? If I decide to drink more than is good for my health can that be rational?

Who can say, apart from me?

So when you see someone not appearing not to reason in a way you think they should, what is your response?

You are sat beside a man in a bar who appears somewhat drunk. He asks the barman for another drink.

Do you advise him to go home?

Do you tell the barman not to serve him?

Or do you assume that he is capable of knowing how much he wants to drink and not interfere?

Ultimately, the answer relates to your view on responsibility. At what point does the over consumption of alcohol absolve the individual from resposibility for the consequences of his actions?

As a consequentionalist, I would argue that it never does so.

“If anyone wants an example of economic reasoning at its most stubbornly ideological and grossly simplistic, Tim’s comment provides it.”

Ah, no, sorry, I’m not the one being simplistic here at all. NICE is.

They have come up with a figure for the costs of alcohol. £27 billion a year sticks in my mind. This includes the costs of hangovers, lost work, early deaths, lost GDP from all of those and Uncle Tom and his Cobblies and all.

OK, let us, for the same or argument, accept this number.

Now, do we go on to say “Oh Heavens to Betsy!” and ban it? Raise the price? Employ ex-alcoholics to lecture all entering pubs?

Well, actually, we’ve still got another piece of economics we’ve got to do yet. We’re in the process of a cost benefit analysis and so far all we’ve got are the costs. What we now need is an estimate of the benefits.

Stating that there are addicts, those who die early, that’s true….but we’ve already included those in our costs, recall?

Now, if we wanted to work out the benefits of booze we’d want to look at the number of heart attacks avoided by drinking….and yes, mortality does *fall* when people have a few bevvies. If you start at teetotal levels and then drink a bit then there’s a curve of lower mortality….we don’t get back to the same as teetotal levels until the 40-50 units a week level (as John B says, or 60 units as I recall).

So, booze saves lives and we should include that as a benefit. And we can go on, refining our benefits estimate. Do hop fields add to biodiversity, where would Marmite come from without brewer’s yeast.

OK, but we can also take a shortcut here. Not to look at everything, but just at one great big number which would be inhjcluded in everything. What’s the enjoyment that people get from boozing? What’s that worth to them?

Now, note, we cannot assign some “real value” to this enjoyment. Partly because there is no such thing and partly because people have different estimations of value. But we can look at what people, by their own actions, place upon the value of booze.

What do they spend upon it?

Now, sure, you can call Mr. Economic Weirdo here for saying this but doing so would betray a certain ignorance of how these things are done. For example, when we calculate GDP we need to try and work out what is the value of government? Obviously it’s not nothing…roads and courts are nice to have. But it’s very difficult to measure the output. What is the value to society of a court system? Of Ed Balls? (Answers may differ there.) Well, what we actually do is we say the value of government is what we spend upon government.

Yes, Govt contribution to GDP is defined as what we spend on Govt.

The logic being that if we valued government more than what we spend on it then we would spend more on it. If less then less. And while there are those who take each position (roughly, say, me on the less side and possibly you on the more side) what we do actually spend on government is a reasonable, in a rough and ready way, averaging of the positions of the 48 million people who’ve got the vote.

So, when we’ve got things which are difficult to measure, the joy, happiness and general fluffy kittens that come from knowing that Yvette Cooper has a nice pension plan at our expense, we simply say that that value must be, at least, what we’ve spent on it.

And so with booze. The value to those who spend upon booze must be at least what they spend upon booze. Don’t forget, we’ve already counted all the unfluffy kittens in our costs. We’re now just looking for benefits, not the balance quite yet.

For if people did not value a pint at £4 then London would have no one in the pubs. If White Lightning was not valued by those who purchase it at 3 p a litre then White Lightning would not sell.

So, just as we measure Govt as a percentage of GDP by measuring its value at (at least!) what we spend on government, so must booze be valued, by those spending the money on it, as at least being of the value of the money they’re spending on it.

So, Hurrah! We’ve now got our costs (provided by those nice people at NICE) of £27 billion and we;ve got our benefits, procided by how much people actually spend on booze, of £50 billion.

Cost are lower than benefits: good, this is therefore an addition to hte joyousness and general fluffy kitten count in the nation.

There is nothing stubbornly ideological, or even grossly simplistic, about this. This is the way that we do all of these things.

Should we build windmills? The Severn Barrage? Nuclear power plants? What is the value of government? Should we put bumps in the road outside schools? How about high speed rail?

Absolutely all of these questions are answered by people doing cost benefit analyses. And they’re all done in largely the manner I’ve described.

What is the value of the costs? What is the value of the benefits? Subtract costs from benefits and if the leftover is positive then we’ve got a good idea. If negative, it’s a bad one.

“@34, that’s not “economic reasoning””

Oh yes it is Luis, oh yes it is.

“Tim, here’s some homework for you. Go and talk to a suicidally depressed, bankrupt, chronic alcoholic. Ask him if he thinks the “value” he gets from drinking exceeds that he would get from giving up. Ask him if the “enjoyment” he gets from the booze is worth more to him than the cash he hands over.”

Having just interviewed the mirror…..Yes!

I don’t see why this is such a difficult concept for people to get. If I value the money more than the booze (or to be even more economically precise, the other things that I give up in order to get the booze, for the true cost of something is what you give up to get it) then I won’t spend the money on booze, will I?

Therefore by spending the money on booze I value the booze more than I do the money.

How could it be otherwise?

56. Luis Enrique

Tim W

First, I am sorry to learn that you are a suicidally depressed bankrupt alcoholic: are you being prevented from seeking help by your belief that you wouldn’t be a suicidally depressed bankrupt alcoholic unless the value to you of being so must logically exceed the cost, otherwise you won’t be doing it. If so, I urge to recognize the flaws in your reasoning and seek help to improve you life.

Your long comment @54 does indeed contain some sensible reasoning, part of it being based upon the implicit assumption that for millions of drinkers, rationality is a reasonable approximation for their behaviour, hence we can conclude that the value derived exceeds the cost etc.

It does not provide any justification for applying that reasoning to the case of an alcoholic. @55 you ask: “how could it be otherwise” to which the answer is that anything that undermines the of “revealed preference” could cause it to be otherwise, to whit: brute irrationality, psychological disorders etc. or perhaps – just a thought – the addictive nature of alcohol.

57. English Mansion

“Matthews Street in Liverpool”

Do you mean Mathew Street?

All these comments about the economic logic of drinking, apart from coming across like a smart-arsey arms race, ignore that heavy alcohol use *doesn’t just affect the user*. I know libertarians like to imagine that everyone operates in their own personal vacuum (it’s the only way their specious arguments will stand up), but it ain’t like that in real life. I speak as the child of a chronic alcoholic.

If I value the money more than the booze… then I won’t spend the money on booze, will I?

It must be really weird for you living in world in which people constantly behave in ways which you consider definitionally impossible.

Thanks for the long lecture on cost-benefit analysis. I have no problem with most of what you said. Except that from my point of view it’s the way we often have to proceed because of the lack of sensible alternatives, what with the impossibility of getting inside other people’s heads and all. Whereas you believe it because it is The Truth.

For heaven’s sake, you are counting miserable people killing themselves as a “benefit”. Now if you said you were doing that just to make the sums easier, or indeed possible, then I probably wouldn’t argue back. After all we have to make simplifications in our models to get anywhere at all, I appreciate that.

But you’re doing it because you think it is true by definition, which makes you little short of a madman, frankly. And you have no interest whatsoever in the fact that your definitions of value, benefit, worth, value, etc are all fucked beyond recognition, and flatly contradicted by what the people involved actually say.

David Semple: “I am opposed to such a law on the grounds that people should be allowed to drink to excess if they wish”

The trouble is that the rest of us have to bear most of the costs of the consequences:

“The number of alcohol-related deaths in the United Kingdom has consistently increased since the early 1990s, rising from the lowest figure of 4,023 (6.7 per 100,000) in 1992 to the highest of 9,031 (13.6 per 100,000) in 2008. Although figures in recent years suggested that the trend was levelling out, alcohol-related deaths in males increased further in 2008. Female rates have remained stable.”
http://www.statistics.gov.uk/CCI/nugget.asp?ID=1091

“THE rate of alcohol-related deaths in Scotland is rising – and is more than double the rate for the UK as a whole, figures out yesterday showed. Figures from the Office for National Statistics (ONS) revealed that in 2006, there were 13.4 deaths per 100,000 people linked to alcohol in the UK – up from 12.9 the previous year.”
http://thescotsman.scotsman.com/health/Scots-alcohol-death-rate-twice.3714009.jp

“Scotland is in the grip of a health crisis after research revealed that more than half of men and 30% of women drink to excess.”
http://www.guardian.co.uk/society/2009/feb/22/scotland-alcohol-crisis

Really Tim.

I do not think people are generally concerned by the idea that people spend money on alcohol and enjoy it, nor that alcohol has a cost. That these balance out with a surplus of pleasure is a good thing certainly.

The problem is that the joy I receive from freely choosing to consume alcohol does not make up for the compulsive purchase of alcohol which leads someone to suicide.

The aggregate cost/benefit analysis certainly rules out arguments such as “X does Y damage so we should take blanket action against X”.

However, it does not rule out “X has specific ill effect Z and we can target that”. does it?

Of course there are other problems. Are you free if you’re an addict? That’s not a question which you can answer in your usual flippant style, it needs some deeper thought. Kant and stuff.

Why do you descend into generalities when you were given the specific example of an suicidal alcoholic?

61. Luis Enrique

EM @57

well yes, quite. I’ve been arguing with Tim merely about the individual. Of course the fact that ones actions affect others is well known, and a central part of economics.

“it’s the way we often have to proceed because of the lack of sensible alternatives, what with the impossibility of getting inside other people’s heads and all.”

Err, that’s what I said. We can’t ascribe a value to it directly, so therefore we have to look for some sideways on method of doing so.

“Now, note, we cannot assign some “real value” to this enjoyment. Partly because there is no such thing and partly because people have different estimations of value. But we can look at what people, by their own actions, place upon the value of booze.

What do they spend upon it?”

See?

“For heaven’s sake, you are counting miserable people killing themselves as a “benefit”.”

No, I’m not. The miserable and the killing bit are all included in the costs which have already been calculated by NICE. We are trying to find purely the benefit.

Miserable people do feel better when they drink: that’s why they drink. We’re trying to find the value of that “feel better” which we can offset against the already acknowledged and known costs.

Again, no:

“But you’re doing it because you think it is true by definition, ”

I am saying that by definition people must get some value from what the voluntarily do. Why would you do something that you don’t get benefit from?

It doesn’t have to be cash value, of course. I’m not being reductionist to cash about this. The warm glow of altruism, a little happy buzz, chasing away the DTs, these all have a value to those doing them.

Now, if you want to claim that human actions are not motivated by value considerations well, fine, go ahead, but that’s even more of a madman’s reaction to the world than anything I’ve ever spouted.

Look, why do people smile at babies? Because babies smile back….and being smiled at by a baby makes us feel good (something we can thank evolution for….those who didn’t feel good at being smiled at by babies tended to have fewer such that survived and thus there has been evolutionary pressure extending the programmed response to feel good about being smiled at by babies and thus smiling at babies). Smiling at a baby provides us with something of value, that’s why we do it. Getting out of bed in the morning provides us with something of value: not getting out does too. Which we do will depend upon which we value more. The job and the ability to eat or a long nap?

Why is this so difficult to understand? We humans do things because we value them.

Worstall in defending circular argument with more circular argument shock.

“Are you free if you’re an addict?”

Certainly willing to entertain the idea that you’re not *as* free if you’re physically addicted to a drug.

You must be at least partially free for we all know many people who have been able to free themselves from addiction to such a drug.

I refer, of course, to tobacco.

For that is the only one that (at least as far as I know) is indeed physically addictive. The others, booze yes, even heroin, are not physically addictive. There’s a very strong psychological attatchment to them, certainly, withdrawal can be painful (a bad flu case for heroin, alcohol withdrawal can kill (AA peeps managing someone coming down will carry rum with them to provide a shot to stop seizures)) but they are not physical addictions in the same sense that baccy is.

“However, it does not rule out “X has specific ill effect Z and we can target that”. does it?”

Sure, my ire is aimed at two groups.

1) Those who would only count the cost and deliberately ignore the benefits

and

2) Those who seem flabberghasted at the idea that what we spend on something will be a minimum guide to the value we place on that thing.

65. Luis Enrique

Tim W

You are puffing out an awful lot of smoke to conceal the fact that’s obvious to anybody who reads this thread: you made a mistake applying “revealed preference” reasoning to alcoholism. See your comment @47. I don’t know why you don’t just address that, fess up, and recant.

But it is revelaed preference!

“Look, why do people smile at babies?”

I’m off to Dragons Den to get cash for my new business idea, pay £1 to smile at a baby.

“I am saying that by definition people must get some value from what the voluntarily do. Why would you do something that you don’t get benefit from?

It doesn’t have to be cash value, of course.”

Erm…but isn’t that exactly what you did above, you took the supposed benefits from booze (and missed out a crucial one – social capital) and tried to place a cash value on it by taking a short cut and looking at expenditure on booze, then comparing it to costs of booze (rather naively assuming that the costs of booze you cited were accurate – i can google research on costs of booze and come up with figures for it that are extremely different depending on which costs you attribute to booze).

Why would you do something that you don’t get benefit from?

Because you’re a fallible, weak-willed human being rather than a fictional entity dreamt up by an economist. Or because you’re a spontaneous character who does things unthinkingly. Or just for the sheer hell of it (I know, the value you place on sheer hell, blah blah). Who knows, maybe you don’t even know why you did it yourself?

Look, I get it. You’re using all these words, circularly: value, benefit, worth, etc. If I do something, then by definition I value it, I derive benefit from it, it is worth to me whatever I went through to do it, etc.

Well fine, but one of two things holds: either you’re using existing words in this strange and unfamiliar way, in which case you should expect people to disagree or misunderstand just about everything you say, and it’s your fault when they do. (In fact I though economists tended to use the word “utility” to avoid exactly this problem.)

Or you actually believe that “benefit” has some psychological meaning beyond “whatever you do”. In that case you are being ludicrously reductionist, and claiming a single psychological mechanism which accounts for literally every single human action every undertaken, a single scale which can measure everything from the “benefit” a potential buyer would derive from owning IMB,PLC to the “benefit” a recovering bulemic gets from chucking up her lunch, and setting herself back on the cycle of illness. (Well she must have valued puking her lunch into the toilet more than she values a long and healthy life, otherwise she wouldn’t have done it would she?)

Anyway I give up.

69. Luis Enrique

OK, this must be getting boring for everyone else, so I retreat with one last shot. The applicability of “revealed preference” reasoning to addiction is refuted by the observation that people are willing to pay money to cure their additions. If you are merely doing something that makes you better off, why would you incur costs do stop doing it? This paper discusses.

“It doesn’t have to be cash value, of course.”

Erm…but isn’t that exactly what you did above,”

No, it isn’t.

I said that there is some value. Now, how can we estimate that value?

Well, it must be higher than the cash spent upon it. Thus the cash spent is a minimum value we can ascribe to the activity.

“(In fact I though economists tended to use the word “utility” to avoid exactly this problem.)”

And if I started using “utils” everyone would ask me to stop using jargon.

“The applicability of “revealed preference” reasoning to addiction is refuted by the observation that people are willing to pay money to cure their additions. If you are merely doing something that makes you better off, why would you incur costs do stop doing it?”

Because of the two possible courses of action, addiction or paying to be not addicted, you have revealed your preference for one state or the other by staying addicted or paying to be not addicted.

You have revealed your preference. Revealed preference.

Geddit?

It reminds me of the joke where one economist spots £20 lying in the street, and the other one says to him “That’s not a real £20 note – if it was somebody would have picked it up by now.

“staying addicted or paying to be not addicted.”

Or option 3, staying addicted and paying to be not addicted at the same time because you’re desperate to come of booze, but the treatment hasn’t yet worked.

Seriously, this is hilarious. The sum total of Worstall’s input to this discussion is “people want to do things, because they want to do them”.

And he keeps banging on about it, over and over, as though he thinks this is some kind of insight.

Please tell me he’s doing a parody of an overeducated twerp?

But if you’re paying loads to be in rehab, whilst at the same time secretly smuggling in booze, than that must be your optimal choice. I mean why would you do it otherwise? That is the preference you have revealed. And of course you feel really shitty and guilty about it, so you derive lots of extra benefit from that, because if you hadn’t wanted to feel shit then you would have felt some other way. Plus there’s the stacks of benefit you gain from passing out in your own piss, because if you’d wanted sleep in your bed or piss in the toilet, then you would have done so. Then there’s the accumulated benefit of you’re fucked liver, estranged family, massive debt, and the rest, all of which you chose as being the optimal of the available options. All in all it’s a benefit bonanza!

75. John Meredith

Tim is right on this and it is such a simple idea (that people pay to have a drink because they want one) that I am surprised that others struggle so much with it. It seems that most ‘liberals’ have a point after which they become paternalists with a dose of old time religion moralising thrown in (they raraely want to stop people from engaging in self-harming by, say, jogging).

The idea of ‘addiction’ is far from straightforward either and I am inclined to think it is an empty category. If an ‘acoholic’ really prefererred a life without drink he or she would choose a life without drink. People keep drinking because they find things worse when they stop. That is why bribery is more efective in getting peopleoff drugs than counselling. Check out this for ther details: http://www.amazon.co.uk/gp/product/0674032985/ref=ord_cart_shr?ie=UTF8&m=A3P5ROKL5A1OLE

Of course some people suffer from mental illnesses that make life without self-medication unbearable, and their lives are tragic, but they are still making a preference choice: better the ills caused by the drink than the unmediated ills of my condition.

76. John Meredith

“But if you’re paying loads to be in rehab, whilst at the same time secretly smuggling in booze, than that must be your optimal choice.”

But it is obvious, isn’t it, that there are other reasons for going into rehab than to get off the booze? It my be just to get the people who want you off the booze off your back. Wasn’t there a beehived chanteuse who wrote a song about this?

Pointing out that booze isn’t all fun and games isn’t the same thing as wanting to ban it. In the same way being against the prohibition of drugs doesn’t mean that you think Heroin is harmless.

“Tim is right”

trans: “I’m as stupid as him”

79. Luis Enrique

just … when…. I thought …. I was out ….

If addiction revealed your preferences, paying to be not addicted would not be rational. If people sometimes do things that are not rational, actions do not always reveal preferences.

If being addicted or “not addicted” is merely a matter of preference, then you can freely choose it. If you cannot freely choose it is not merely a matter of preference and your choices only reveal your preferences up to the “cost of choosing”.

I have £10, cost of X is £1 cost of Y is £2, I buy 8 units of X. Then you can map from choices to preferences (well, if you observe some variation in prices). If I then append an arbitrary “cost of choosing” X, then the map from choices to preference changes, and you can no longer conclude that the benefit I gain from Y must exceed the benefit I could get from spending that money on X, because actually I’d much prefer more X, but it’s subject to a “cost of choosing”.

If you want to argue that the “cost of choosing” X should simply be netted off the benefit of X, i.e. the cost of choosing itself becomes part of the utility function which describes your preferences, then what? Are you going to say that the cost of not drinking (negative preference) was always there, and before you became addicted there was this terrible cost to “not drinking” equal to that experienced by an alcoholic? Of course not. So you have to say that this preference only materialized once addiction was formed, that “stopping drinking” differs from “not drinking”, in which case your decision to start drinking in the first place was taken without full information of future preferences hence does not reveal your preferences. The only way you can salvage RP is that people who start drinking do so with the full foreknowledge of preference evolution and are maximizing their life time utility, as Becker recognized, and please don’t tell me you want to build on those foundations.

Revealed preference follows from “everything people do is rational”. To demonstrate the former you must first demonstrate the latter, you cannot use the former to prove the latter, that’s begging the question. As Neil has pointed out.

Also note that once you start putting whatever I need into the utility function, like adding in the cost of choosing, then rationality becomes an empty concept and does not distinguish any act from any other act. One might as well say I have “a preference X over Y, but I also have a preference for acting against my preferences”

80. twoseventwo

(they raraely want to stop people from engaging in self-harming by, say, jogging).

Indeed. I’ve often thought that society doesn’t take into account how difficult it is growing up when one of your parents is a jogger.

81. the a&e charge nurse

[81] yes, and joggers rarely put a bottle in a strangers face, unless they happen to be a pissed jogger?

82. John Meredith

“If addiction revealed your preferences, paying to be not addicted would not be rational. If people sometimes do things that are not rational, actions do not always reveal preferences.”

Luis, preferences needn’t be rational. It is not rational to prefer House music to Beethoven but it is still a preference. Laboratory experiments into rational choice reveal predictable irrationalities (as Daniel Ariely puts it) but not ones that endure over time. A ‘problem’ drinker returns time after time to the drink rather than not doing this. That reveals a preference. Of course there may be emotional conflicts along the way, but you do not haave to pay anything not to drink, you just need not to drink aand, in fact, the vast majority of problem drinkers and drug users do simply stop.

“If being addicted or “not addicted” is merely a matter of preference, then you can freely choose it. If you cannot freely choose it is not merely a matter of preference and your choices only reveal your preferences up to the “cost of choosing”.”

No choice is ‘free’ in the very stong ssense you seem to demand. All our ratinalities are bounded and informed by emotional wants and needs. But a drinkers choice is as free as the choice of someone to spend a lot of money on a ferrari, say. If we are to say that some choices are not ‘really’ free, how are we to say which ones are and which ones aren’t? And how can policy makers make ‘free, rational’ choices in coming to these deceisions?

“I have £10, cost of X is £1 cost of Y is £2, I buy 8 units of X. Then you can map from choices to preferences (well, if you observe some variation in prices). If I then append an arbitrary “cost of choosing” X, then the map from choices to preference changes, and you can no longer conclude that the benefit I gain from Y must exceed the benefit I could get from spending that money on X, because actually I’d much prefer more X, but it’s subject to a “cost of choosing”.

I am not quite sure what you are saying here, but it seems to be no more than ‘changing the costs changes the incentives’, which we would all agree with. And you need to adapt your model so that the chooser makes exacrly the same ‘irrational’ or ‘unfree’ choice again and again and in the face of huge costs elsewhere in his or her life.

“Of course not. So you have to say that this preference only materialized once addiction was formed”

I don’t undersand what you mean. Drinkers by definition do not start off as alcohilics (allowing for that categoryy for the sake of argument) so their preferences are formed ‘pre-addicition’ ‘Addiction’ is really just a manifestation of extreme preference, one that will accept more disbenefits than mostof us will. We see this in many things. A friend of mine has sufffered three operations on his knee because he likes to play football so much. I gacve up football rather than suffer these disbenefits. he has lost a lot of time, money and opportunity, as well as the pateince of his partner, but he persists. Is he irrational? Should he be prevented from this course of action that damages his socal life and health so much?

“that “stopping drinking” differs from “not drinking”, in which case your decision to start drinking in the first place was taken without full information of future preferences”

But no decision is ever made with knowledge of future preferences. How I wish we hadn’t painted the front room that colour, but what are you going to do?

“hence does not reveal your preferences.”

Your behaviour in the present reveaals your pressent preferences, although it may be true that you past self would have chosen differently. I won’t paint the front rom the same colour again. But the drinker keeps drinking.

“The only way you can salvage RP is that people who start drinking do so with the full foreknowledge of preference evolution and are maximizing their life time utility, as Becker recognized, and please don’t tell me you want to build on those foundations.”

But this is nonsense. We need only look at the preferences now. If someone tellsyou that he really, really does not want to drink while he is buying a bottle of scotch, he is revealing a preference that he would prefr to conceal. It doesn’t matter what his past self woud have chosen.

“Revealed preference follows from “everything people do is rational”. ”

No, see aabove,. Preferences need not be rational. In fact they may never be rational, reason being the slave to the passions and all that.

To demonstrate the former you must first demonstrate the latter, you cannot use the former to prove the latter, that’s begging the question. As Neil has pointed out.”

This is nonesense again. All revealed preference means is that we get a more accurate picture of wwhat people want from what they choose for themselves than from what they say they want or prescribe for others. it begs no questions. Why do I think Linda likes eclairs? Well, she eats a lot of eclairs when there are other choices available. How is that question begging?

“One might as well say I have “a preference X over Y, but I also have a preference for acting against my preferences””

One might SAY anything. But if we watch what you DO over time, you will reveal your preference.

83. John Meredith

“[81] yes, and joggers rarely put a bottle in a strangers face, unless they happen to be a pissed jogger?”

Joggers impose costs on society. They are not exactly eqivalent to the costs of alcoholism, but they are costs (they sufffer a lot of injuries, live longer, get in the way and are very boring). It does away with one of the strands of argument, that’s all.

84. Luis Enrique

JM

“preferences needn’t be rational” … no, preferences and rationality are quite distinct concepts, one would never say preferences are rational. see links @51 for basics and @69 for discussion in this context.

85. John Meredith

Luis, good, we agree, but I can’t quite see where that leaves your argument. I think you have led yourself astray with formulations like ‘paying to be not addicted’ when, in fact, drinkers (and others) actually pay for something else, a service of some kind, and seen in that light there is no irrationality or inconsistency. I mght wel prefer to drink than not drinkbut still be willing to pa a lotof money for ehab in order t manage the expectations of the people around me. And we see this all the time, with users smuggling drugs and drinks into rehab with them on the day they enter.

“[81] yes, and joggers rarely put a bottle in a strangers face, unless they happen to be a pissed jogger?”

A jogger putting a bottle in a stranger’s face would be an argument for prosecuting the jogger with assault – it’s not a good argument for banning jogging or making jogging more expensive.

“Seriously, this is hilarious. The sum total of Worstall’s input to this discussion is “people want to do things, because they want to do them”. ”

No. By observing what people give up to do the things they want to do we can put a value on what they give to being able to do such things.

If someone pays £20 to go see a Showaddywaddy reunion then it’s not exactly a blinding scientific insight that they value going to a Showaddywaddy reunion at something more than £20.

If someone pays £200 to go to a reunion of an even older group of crone rockers, Mick, Keef and friends, then again, it’s not exactly a blinding insight (however strange we might think it) that the bloke forking out £200 thinks that it’s worth £200 quid to go and see dentures flapping to I Can’t Get No Satisfaction (Viagra Reprise version).

If someone pays £4 for a pint then we can, similarly, say that that person, at that moment in time, thought that a pint was worth £4.

Thus we can put a value on what drinkers think is the value of drinking. It’s not a very accurate value, true, it’s only a lower bound, not the full value.

But it is a resonable and rational valuation.

First up let’s separate license and off-license. In a licensed premises you are being served by someone. If you start to get drunk, or violent, or start to throw-up they can stop serving you at their own discretion.

With an off-licence there’s no obvious restriction because you’re not consuming the product there and then.

So tie that to the ‘cheap’ booze which is being presented as a result of supermarket competition and the accusations of selling it a reduced or negative profit. Why would they do that? To get you into the store of course where as you wander through to the booze aisle (normally located to the rear of the store) you might pick up some other bits and bobs that have a higher profit margin and that you wouldn’t normally have gone to the store for on their own.

So I offer a potential solution and it doesn’t involve minimum pricing or restrictions for customers – alter the off-license such that it can be only granted to a store that only sells alcohol and those items that can be deemed peripheral to it. Even if supermarkets set up an ‘alcohol store’, with its own till customers aren’t going to queue there then go into the main supermarket to get extras on impulse and at the same time if there really is reduced profit/negative profit going on the separation of the store will highlight that in the accounts and to the shareholders who’ll demand to know why they’re subsidising this failing venture.

@88 I’ve just exanded on that argument at my blog. This issue is as much about the ways in which alcohol can be consumed as it is about the consumption itself.

90. the a&e charge nurse

[86] well the point being made, albeit not clearly enough perhaps, was that the externalities associated with jogging pale into insignificance when compared to those associated with alcohol.

There is another difference – certain risks are known to correlate positively with drink (domestic violence, rape, etc) all of which mitigate against the argument that society’s use of alcohol can only be viewed from the perspective of the drinker (as Pagar suggested earlier).

I am not trying to make a case for a ban, in fact quite the reverse, I think ALL drug use should be decrimininalised, neither have I argued for a minimum price – just that price MAY be one of a range of options to balance the freedom to drink against the freedom not to be harmed by the drinker (but I have no definite feelings about it either way).

As Devil’s advocate: Bring the price down substantially in pubs, allow smoking in pubs that decide they want to allow it, let pubs open as many hours as they wish.

Add to that bring about a surge in jobs in what was industrial areas as well as other areas in the country. Let Sunday be the same as any other day in the week.

92. Shatterface

Alcoholics won’t drink any less if you put the prices up, they’ll just have less money for food, rent, clothes for the kids, etc.

That’s the nature of addiction.

Is anyone correlating those in favour of raising the minimum price of alcohol against those who want to ban all guns because it looks like the usual suspects wanting the state to enforce their prejudices at the expense of everybody else’s liberty.

93. Charlieman

@92 Shatterface: “Alcoholics won’t drink any less if you put the prices up, they’ll just have less money for food, rent, clothes for the kids, etc.”

Or just steal more.

@88 FlipC: “So I offer a potential solution and it doesn’t involve minimum pricing or restrictions for customers – alter the off-license such that it can be only granted to a store that only sells alcohol and those items that can be deemed peripheral to it.”

Nice try, but what is the shop going to sell? Condoms — OK? Chocolate — OK? Nappies — essential if the condoms fails. Children’s toys — ditto. And then carry on though what your local KwikiMart sells.

Worstall in defending circular argument with *yet more* circular argument shock!

I’m out of here – I’m going to discuss this with a goldfish instead.

95. Charlieman

@92 Shatterface: “Alcoholics won’t drink any less if you put the prices up, they’ll just have less money for food, rent, clothes for the kids, etc.”

If we accept that there are a large number of functioning alcoholics — people who can organise some concept of domesticity and who probably work — what would be the impact of increasing alcohol prices by any mechanism?

If the individual has a dependency, and by receipt of state benefits or the help you up from tax credits s/he is able to function, how does the government respond? Surely if government raises the cost of alcohol, government has a practical need to ensure that alcohol dependents remain functional. Grants for alcoholics?

I am not suggesting that. I am merely making the point that raising alcohol prices will have ill considered consequences.

@Luis, aren’t you making some dodgy assumptions about causality here?

You seem to be saying that the chain for your friend was “drinking -> problem drinking -> depression -> suicide”.

I don’t think that’s a plausible chain of events. Rather, “depression -> problem drinking and suicide” fits better with the way people behave. People without psychological problems don’t become suicidal alcoholics just because booze is cheap.

Chronic drunkenness and suicide are both *examples of self-destructive behaviour*. And, I suspect, not very price-elastic.

@93 Charlieman – Condoms, nappies and the such cannot be connected to alcohol as a product, they could sell non-alcoholic beverages, crisps, nuts etc. i.e. the type of items you’d generally find for sale behind a pub counter. If they start to branch out they stop or lose their license.

98. Filmskate

Increasing the unit price will not solve the problem of binge drinking or alcohol related illness. It is a cultural problem unrelated to price. Scandanavia has some of the highest alcolhol prices in Europe but that has little effect on their heavy drinkers. In France the price of wine is substantially lower than in the UK and yet their drinking problems are not in the same league as over here. Why? It’s a culture thing. Prohibition in the US proved that people will get their booze no matter what – banning it only put the whole operation into the hands of the gangsters. That, I’m afraid is what will happen here if the price gets too high – smuggled booze, homemade hootch, a move towards relatively cheap illegal narcotics rather than alcohol. This is a typical government response: it’s easier to control the sale of alcohol than to sort out why teeagers are drinking themselves into a stupor. With this scatter-gun approach moderate drinkersare going to be penalised in order to attempt to control a minority of irrisponsible drinkers.


Reactions: Twitter, blogs
  1. Lee Griffin

    RT @libcon: Having a minimum price on alcohol is a crap idea http://bit.ly/bt9a9F

  2. N S

    RT @Jaspersharpe: Spot on……. RT @libcon Having a minimum price on alcohol is a crap idea http://bit.ly/bt9a9F

  3. James Garner

    I didn't bother reading this on @libcon, but I agree with the title http://bit.ly/bBKZ46 It's stuff like this that got me into politics!

  4. Christopher Wilson

    RT @JimGarnerMP: I didn't bother reading this on @libcon, but I agree with the title http://bit.ly/bBKZ46 It's stuff like this that got me into politics!

  5. Parley Peck

    Having a minimum price on alcohol is a crap idea | Liberal Conspiracy http://bit.ly/bcpzFM

  6. Liberal Conspiracy

    Having a minimum price on alcohol is a crap idea http://bit.ly/bt9a9F

  7. Martin Coxall

    RT @libcon: Having a minimum price on alcohol is a crap idea http://bit.ly/bt9a9F

  8. Jasper Sharpe

    Spot on……. RT @libcon Having a minimum price on alcohol is a crap idea http://bit.ly/bt9a9F

  9. Tweets that mention Having a minimum price on alcohol is a crap idea | Liberal Conspiracy -- Topsy.com

    […] This post was mentioned on Twitter by Liberal Conspiracy, Lee Griffin, N S, N S, Jasper Sharpe and others. Jasper Sharpe said: Spot on……. RT @libcon Having a minimum price on alcohol is a crap idea http://bit.ly/bt9a9F […]

  10. Why is everyone who drinks booze treated the same? | Liberal Conspiracy

    […] recent discussion on the minimum price for alcohol has proven to be hilarious for a further demonstration of the sociological ignorance of Tim […]





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