Friday, 17 February 2017

Rational alcohol taxation

This week I proposed replacing Britain's perverse system of alcohol duty with a flat tax on units of alcohol. A 9p/unit tax would pay for all the external costs of drinking to the government and would change the tax rates on a range of drinks as follows:


As you can see most - but not all - drinks would become cheaper. This is because drinkers are grossly over-taxed at present (ie. the tax revenue greatly exceeds the costs to public services). Cider, by contrast, is somewhat under-taxed.

You can read the short briefing paper here.

I also wrote about it for the Telegraph...

A new briefing paper from the Institute of Economic Affairs shows what a fair system would look like. British drinkers currently consume approximately 50 billion units of alcohol a year. To recover the £4.6 billion in costs, there should be a flat rate of tax of 9p on every unit of alcohol sold. That would mean a higher tax on some strong ciders and a lower tax on other drinks. Overall, it would mean lower taxes, but even after this reform most of our drinks would still be more expensive than the European average. In the EU-27, the average duty on a pint of lager is 14p (we currently pay 52p) and the average tax on a bottle of wine is 44p (we currently pay £2.08).

This is not the first time the idea of taxing alcohol by the unit has been suggested. Economic think tanks and temperance groups alike have called for the same thing. In 2011, the Institute for Fiscal Studies concluded that "it would seem desirable to treat different types of alcohol in the same way in the tax system" and, in 2016, the Alcohol Health Alliance called on the government to lobby the EU so that "drinks in all categories can be taxed according to their strength". This raises the salient point that EU regulation currently prohibits a sensible system of per-unit alcohol taxation. As luck would have it, this will not be an obstacle for long.

Do have a read.

Thursday, 16 February 2017

People believe poverty has increased because they are misinformed

The usually sensible John Rentoul has produced a very special sentence for the Independent...

So the solution to the puzzle is that, objectively, poverty hasn’t increased, but that people feel it has, which means that, in a way, it has. 

This could be read as the final, feeble pistol shot of the left after years spent predicting an epidemic of poverty due to 'austerity'/the Tories/the bankers that never appeared. In one line, Rentoul seems to have crystallised the left's preference for emotions over facts.

That is unfair, however. Badly worded though it is, Rentoul is making a point that is merely wrong, rather than insane.

It is a reference to the latest version of the Joseph Rowntree Foundation's Minimum Income Standard (MIS) which was published yesterday. JRF claims that 19 million people subsist on an inadequate income and are either in poverty or are 'at risk of poverty'. This is a rise of 4 million since 2008/09.

The MIS is based on what people in focus groups say they need to have an adequate standard of living. This is obviously subjective and, in practice, it is closer to an average standard of living than an 'adequate' one.

For example, here are some of the clothes that a mother of two needs to buy for herself (new) every single year in order to avoid being 'at risk of poverty', according to the MIS:

5 vest tops
4 pairs of jeans
4 jumpers
4 pairs of leggings
1 pair of jogging bottoms
2 summer skirts
2 winter skirts
5 smart tops
2 summer dresses
1 hat
1 scarf
1 pair of gloves
1 swimming costume
1 night dress
1 pair of pyjamas
1 pair of slippers
1 pair of flipflops
1 pair of flat boots
1 pair of heeled boots
1 pair of trainers
1 pair of court shoes

There are other items on the list that need to be bought more or less frequently, but that gives you a illustration. I'm not suggesting that this kind of annual wardrobe change is unusual for a woman, nor am I suggesting that you have to be rich to afford it. But to claim that you need to replace all this stuff every twelve months in order to have an 'adequate standard of living' is a bit of a stretch, in my view. And yet if you can't afford this, you are on the 'brink of poverty', according to the Independent.

I've written about the MIS before and was on the radio talking about it yesterday, so I won't go on about it here. Suffice to say, I don't think it measures poverty. The Joseph Rowntree Foundation also doesn't think it measures poverty and they are happy to confirm this when asked. But they can't stop the likes of The Guardian referring to the MIS as the 'poverty line' and I don't suppose they lose much sleep over people misrepresenting it as such.

Rentoul also interprets the MIS as a poverty line and he cites their figures as evidence that poverty has sort of got worse even though all the official evidence shows the opposite. For instance, here is the Office for National Statistics data showing income growth since 2007/08 (adjusted for inflation). Incomes have grown by 13 per cent in the bottom fifth. Only the richest fifth has seen a decline.


Since the strongest income growth has been in the poorest two fifths, it is hard to believe that four million people have been pushed into poverty an inadequate standard of living. JRF say this is because the cost of their basket of goods has risen by more than the RPI and CPI measures of inflation. I have no way of checking this but it would be surprising if the MIS basket was so dramatically different to the general basket of goods used by the government. It seems to be a partial explanation, at best.

Another explanation is that the JRF report stops at 2014/15 and thereby ignores the sharp rise in incomes seen in 2015/16. It is a shame they didn't wait a bit longer so they could get a more up to date picture (the new figures were published by the ONS last month).

In any case, if I am forced to choose between inflation-adjusted income data from the ONS and a dubious measure of not-really-poverty from JRF, I'm going to stick with the ONS. We know that unemployment is almost at a 40 year low, incomes are at an all-time high and wages grew by 2.6 per cent last year. Relative and absolute poverty are both lower than they were in 2008.

In other words, there is very little supporting evidence for JRF's claims except - as Rentoul points out - people's intuition. Accepting all the ONS evidence, Rentoul asks the question:

So why do people feel that poverty and inequality have become worse?   

In Rentoul's mind, the MIS holds the answer. People are getting wealthier but our definition of poverty keeps changing...

It would seem that the income most people think is needed for an acceptable life has risen faster than incomes generally. So we would now think of someone as “poor” if they cannot afford, say, a dishwasher, when we wouldn’t have thought that was necessary in the 1980s. 

This is true over the long-term, but I don't think the MIS has become conspicuously more generous since 2008/09. Even if it has, I don't think this explains the common belief that there is an epidemic of poverty and inequality.

I think there is a simpler explanation. Since at least 2008, the middle class left - as epitomised by The Guardian and Independent - has been asserting that poverty (a) is getting worse, and (b) will get even worse very soon. At first this was because of the recession - a plausible supposition but one that, broadly speaking, turned out to be false. Then it was because of cuts to public services under the umbrella of 'austerity'. Then it was because of welfare reform. And now it is because of Brexit.

They have been wrong every time for reasons I discussed in this post. There has been no audit of previous failed predictions and it has been remarkably difficult to get the basic facts in front of the public. The people Rentoul is addressing don't 'feel' that poverty has got worse in the sense that they, personally, have been plunged into poverty. They believe poverty has got worse because that has been the implicit or explicit message of the Independent for years.

They are simply misinformed - and they are happy to be misinformed because it suits their view of how the world works. That is why they cling to any crumb of evidence from the Joseph Rowntree Foundation or the Institute for Fiscal Studies while ignoring the Office for National Statistics. They are just wrong. No other explanation is required. People are wrong about all sorts of things and the belief in immiseration is just one of them.

Tuesday, 14 February 2017

The smoking ban miracle hoax

Jacob Grier has written an excellent article for Slate about the junk science used to justify smoking bans. In particular, he looks at the ludicrous heart attack miracles than supposedly take place whenever people are prevented from smoking in pubs.

When studies sampling larger populations finally appeared, the reported declines in heart attacks began to shrink. A study of the Piedmont region of Italy found a much lower decline of 11 percent, though curiously only for residents under 60 years of age. England, which implemented a smoking ban nationwide, presented the first opportunity to study the matter on a national scale. Researchers there credited the ban with a heart attack reduction of just over 2 percent nationwide.

Critics noted that the rate of heart attacks in England had also been falling in the years prior to the ban and that the reason for the decline was still not clear. Regardless, the data there made it obvious that the miraculous reductions claimed in smaller studies were unrealistically high. Even so, despite acknowledging the wide variation in findings and the admitted methodological limitations of the studies, a 2009 meta-analysis conducted by the Institute of Medicine concluded that the impact of smoking bans on short-term heart attack rates was real and substantial: “Even a small amount of exposure to secondhand smoke… can cause a heart attack,” one member of the IOM panel informed the New York Times, urging that “smoking bans need to be put in place as quickly as possible.”
This report had, however, omitted one of the largest studies of secondhand smoke and heart attacks conducted to date. A 2008 study covering the entire country of New Zealand—a population smaller than England’s, but bigger than the American towns previously studied—found no significant effects on heart attacks or unstable angina in the year following implementation of a smoking ban; hospitalizations for the former had actually increased.

Contradictory research continued to come in. A clever study led by researchers at RAND Corp. in 2010 tested the possibility that the large reductions identified in small communities were due to chance. They assembled a massive data set that allowed them to essentially replicate studies like those in Helena, Pueblo, and Bowling Green, but on an unprecedented scale. Whereas those studies had compared just one small community to another, the RAND paper compared all possible pairings of communities affected by smoking bans to all possible controls, for a total of more than 15,000 pairings. They stratified results by age in case there were differential effects on the young, working age adults, or the elderly. And in an improvement on most other studies, they also controlled for existing trends in the rate of heart attacks.

The study found no statistically significant decrease in heart attacks among any age group. The data also suggested that fluctuations in heart attack rates were common, indicating that comparisons of small communities would frequently turn up dramatic reductions due purely to chance; large increases in heart attacks happened about as often. This explained the headline-grabbing dramatic results in places like Helena or Monroe County that eluded replication in larger jurisdictions. The conclusion of the study was blunt: “We find no evidence that legislated U.S. smoking bans were associated with short-term reductions in hospital admissions for acute myocardial infarction or other diseases in the elderly, children or working age adults.”

A 2012 study of six American states that had instituted smoking bans came to a similar conclusion. So did a 2014 study, which is notable for being co-authored by some of the same researchers who had previously published papers suggesting that the Colorado towns of Pueblo and Greeley had experienced reduced rates of heart attacks after implementing smoking bans. When Colorado enacted a statewide ban, the authors had an opportunity to see if their earlier results could be duplicated across the larger population of nearly 5 million people. No effect appeared. As an additional test, they re-examined the data excluding 11 jurisdictions that had already implemented comprehensive smoking bans: The statewide ban still showed no effect.

In the paper’s admirably honest commentary, the authors reflected on the reasons that earlier studies, including their own, had overstated the impact of smoking bans. The first is that small sample sizes allowed random variances in data to be mistaken for real effects. The second is that most previous studies failed to account for existing downward trends in the rate of heart attacks. And the third is publication bias: Since no one believes that smoking bans increase heart attacks, few would bother submitting or publishing studies that show a positive correlation or null effect. Thus the published record is likely unintentionally biased toward showing a larger effect than truly exists.


Do read it all.

Friday, 10 February 2017

If in doubt, blame the fat kid

The NHS is in the depths of its annual winter crisis, with waiting times and demand at record levels, as the Telegraph reports:

The number of people waiting more than two months to start cancer treatment after an urgent referral was 25,157 in 2016 - the highest on record and almost double the 13,191 in 2010.

Official figures for December reveal just 86.2 per cent of A&E patients were seen within four hours - the worst figure on record.

One of the few benefits of the annual NHS crisis is that it focuses people's minds on the reasons why demand for health care is rising. Most of the time, people are happy to blame the usual scapegoats of smokers, drinkers and fatties, but this is rhetoric designed to pursue political objections. Most of the people in the health service know that it is nonsense and that the real cause of rising demand is the rapidly ageing population. When the winter crisis hits, this has to be acknowledged, because you stand no chance of solving a problem until you know what it is.

But there's always one chump who cannot see beyond 'public health' mythology. I hereby nominate Dr Ian McColl as my Moron of the Month...

Lord McColl, a former shadow health secretary and former professor of surgery at Guy's Hospital hit out at the dietary habits of young people during a House of Lords debate about rising pressures on the NHS.

"It's not so much the old people getting older - because old people have always been getting older," he said.

"The difference in the last 30 years is the grotesque increase in young people getting fatter and fatter."

This is so mind-bogglingly stupid that it barely requires rebuttal, but here are some facts. The graph below shows usage of A & E by age group.


The oldest age groups, along with infants, are most likely to attend A & E - and their numbers are growing rapidly. As the Telegraph notes:

Health officials say the service is coping with "unprecedented" pressures amid a rising ageing population, with an extra 1 million people aged 65 and over since 2010. 

Here are the reasons why people go to Accident and Emergency:


Unsurprisingly, they are mostly accidents and emergencies, not chronic obesity-related conditions. In any case, you would have to be extremely obese to suffer from an obesity-related condition as a teenager.

And even if people were turning up to A & E to have their obesity-related conditions treated, teenagers have a lower rate of obesity than any older age group. 11 per cent of 16-24 year olds are obese, compared with 34 per cent of 55-64 year olds or 29 per cent of 75-84 year olds.

Yes, it is true that 'old people have always been getting older' (actually, it isn't, but let's be charitable and assume he means since the NHS was created). It is also true that the NHS budget has always been rising. It takes wilful ignorance or flat-out imbecility not to see that these two facts are connected.

It should go without saying, but let's say it anyway: the winter crisis in Accident and Emergency is not being caused by a glut of fat teenagers needing urgent treatment for their (largely non-existent) obesity-related diseases.


PS. In not entirely unrelated news, I call for the abolition of the House of Lords in today's City AM.

Thursday, 9 February 2017

Anti-vaping junk

More anti-vaping propaganda came out of America yesterday via that laughable rag Tobacco Control. I wrote about it for Spectator Health.

Ever since e-cigarettes became mainstream consumer products circa 2012, there has been a steady flow of anti-vaping scare stories. In the last 12 months, it has become a flood. The stories nearly always emerge from the US, usually from California, and focus to three claims: that e-cigarettes are as dangerous as smoking, that they don’t help people quit and that non-smokers who use them are more likely to start using tobacco cigarettes.

These claims have been debunked so many times that they can fairly be described as ‘zombie arguments’. Impervious to reason, they stagger on. Only yesterday, a high-quality study funded by Cancer Research UK showed that e-cigarettes are vastly safer than smoked tobacco — but this will not stop someone in the Bay Area claiming the very opposite next week. 

For every piece of evidence showing that youth smoking rates have plummeted since e-cigarettes became popular, there is a blowhard in Philadelphia who insists that vaping is a gateway not only to smoking but to crack cocaine. For every report from the Royal College of Physicians showing that e-cigarettes help people quit smoking, there are a hundred activist-researchers in San Francisco claiming that vaping makes quitting more difficult.

Do read it all.

Wednesday, 8 February 2017

If you see it, report it

Last week I posted a version of a complaint I sent to the BBC about their outrageously one-sided coverage of Welsh government proposals to ban smoking outside hospitals. I haven't had a reply from the Beeb yet, but Simon Clark reports that some progress has been made.

Six days after publishing their news report, the BBC has added a quote from FOREST opposing the idea of banning smoking shelters and has extended the accompanying propaganda video to include the same quote.




It has also added a screenshot from Facebook in a half-hearted attempt to show that views differ on this controversial issue.


Since nearly everyone who will ever read this story had already done so by the time it had some balance injected into it, this isn't much of a victory, but hopefully it will remind BBC journalists to make an effort to at least pretend to be impartial in the future. We can only dream.

So, the lesson is: if you see it, report.

Read Taking Liberties for the full story.



Tuesday, 7 February 2017

New data on alcohol-related deaths

Public Health England's alcohol report was based on a false narrative created by activists in the neo-temperance lobby. Its fundamental deceit was to claim that alcohol consumption and alcohol-related deaths were rising until the duty escalator was introduced in 2008, after which they fell.

The culprits were Nick Sheron and Ian Gilmore of the Alcohol Health Alliance who have repeated this claim again and again and who also claimed that alcohol-related deaths would rise after the beer and wine escalator was scrapped in 2013 and the spirits escalator was scrapped in 2014. The whole point of this charade is to portray price, consumption and mortality as inextricably linked and, therefore, to present endless price rises as the solution.

Sheron and Gilmore used some basic statistical tricks which PHE should have seen through. As I have previously discussed, if you measure alcohol consumption properly (ie. per capita), it peaked in 2004, not 2008. This seems a minor point but it is important since the peak in alcohol-related deaths and the introduction of the duty escalator occurred four years later. The correlation claimed by Sheron and Gilmore does not exist.

The Office for National Statistics published its latest data on alcohol-related deaths today and it makes for interesting reading. There has been essentially no change since 2012, but there has indeed been a decline since 2008.


Although the decline in alcohol-related mortality does not exactly correlate with the decline in alcohol consumption (and is nowhere near as sharp as the 18 per cent decline in alcohol consumption), this graph could be used as prima facie evidence that the decline in alcohol affordability which came about as a result of the recession and duty escalator had an impact on mortality.

Perhaps it did, but if you dig a little deeper, that hypothesis looks shaky. Looking at the mortality rates in the UK's four countries reveals that the decline has largely been a Scottish phenomenon and it clearly began before 2008.

Alcohol-related mortality rate (males)
Alcohol-related mortality rate (females)

In Scotland, the alcohol-related death fell by more than a third between 2003 and 2012, from 47.7 per 100k to 29.9 per 100k for men, and from 19.6 per 100k to 12.5 per 100k for women.

But in England, there has been little change since 2003 despite a sharp decline in alcohol consumption and the introduction of policies that were supposed to make things better or worse, such as so-called '24 hour drinking' and the alcohol duty escalator. There was a clear rise between the early 1990s and early 2000s, but the trend has been largely flat ever since (rather like childhood obesity, as it happens).

If campaigners are going to attribute these changes to the affordability of alcohol, they need to explain why the trends have been radically different in Scotland than in England, despite both countries having the same tax rates.

While they're at it, they should explain why alcohol-related mortality is higher now than it was in 2001 despite alcohol consumption falling by nearly a fifth. Advocates of the total consumption model can no longer use the 'lag effect' as an excuse. The lag is not that long.

And they could tell us why there has been no rise in alcohol-related mortality since 2012 despite the alcohol duty escalator being ditched and rising incomes making alcohol more affordable.

So far, they have avoided these questions. Instead, Sheron and Gilmore have continued to make predictions for England and Scotland that are all about price:

Alcohol related deaths are most likely set to increase in England as incomes outstrip rises in taxation, argue experts in The BMJ today.

Meanwhile, the number of alcohol related deaths will likely continue to decrease in Scotland if legislation on minimum unit pricing for alcoholic drinks is implemented.

Time will tell, but there should be some acknowledgement that the total consumption model and the price-harm hypothesis have been poor predictors of outcomes so far, and that the decline in alcohol-related deaths has been most apparent in Scotland where it began several years before alcohol became less 'affordable'.

As an interesting side note, it seems likely that the statisticians are gearing up to create another epidemic overnight:

Upcoming changes to this bulletin 

In the coming months we will be working to review our definition of alcohol-related deaths. This work is being conducted to improve the consistency of outputs on deaths related to the abuse of alcohol produced by different government departments across the UK. We will be holding a consultation on this definition in the summer of 2017 with the view to using an improved definition in our next release. 

This is an opportunity for the anti-drinking cabal of quakademics such as Mark Bellis, Mark Petticrew and Ian Gilmore to get the ONS to abandon its proper definition of 'alcohol-related' (meaning 'caused by alcohol') in favour of a dubious system of partially-attributable fractions based on junk epidemiology. 

There has been growing interest in the use of partially-attributable conditions to provide a truer burden of alcohol consumption on population health and use of health services associated with these conditions. 

I bet there has. These people have already hi-jacked the Chief Medical Officer's office and Public Health England. They will be delighted to add the ONS's scalp to their collection.

Sunday, 5 February 2017

Why I am optimistic about poverty

I was on The Big Questions (BBC1) this morning talking about poverty. Specifically I was trying to help answer the question 'Will more children be raised in poverty?' The topic may have been inspired by a report from the Resolution Foundation released this week which predicted falling living standards and rising inequality for the rest of the decade.

The Resolution Foundation report echoed the pessimism of a 2016 report from the Institute of Fiscal Studies which predicted no income growth for people in lower income brackets and a rise in absolute child poverty by 2020 ('absolute poverty' is defined as having an income that is 60% or less of the 2010/11 average, after adjusting for inflation). Both reports claimed that these negative outcomes could be avoided if the government abandons its plans to cut some out-of-work benefits. The IFS has since made headlines by claiming that it will take until 2021 for wages to return to 2008 levels thanks to Brexit.

I am sceptical about these gloomy forecasts. The Resolution Foundation and the IFS have been saying the same thing for so long that one day they are bound to be right, but that is the problem. They said the same thing when the government cut benefits at the start of the era of supposed 'austerity'. Since 2011, if not earlier, they have been predicting a wave of inequality, poverty and falling incomes. It's 2017 and it still hasn't happened.

If somebody kept offering me useless horse-racing tips, I would stop listening to them. Given their conspicuous failure to read the tea leaves of 'austerity' correctly, it is surprising that the media continue to take the IFS's prognostications so seriously. I suppose there is always a market for doom and gloom, especially when you are 'respected' and 'independent' - as the media insist the IFS is.

Bad predictions are easily forgotten so let us recap. In 2011, the Institute for Fiscal Studies predicted that by 2014/15, absolute child poverty would have risen from 17.5% to 24% (similar predictions were made in this 2011 IFS report and this 2012 report for the Joseph Rowntree Foundation). In fact, it fell to 17%.

Actually it was worse than that. IFS modelled the data based on six different scenarios - high employment/low employment, benefit cuts/no benefit cuts, progressive/regressive earnings growth - but all but one of them predicted that the rate would be at least 23% by 2015/16. The sole exception was the 'no tax and benefit reforms' scenario but even that predicted a rise to 18.5%. In other words, they had six chances to get it right and overshot every time.

The IFS also made predictions about what would happen to incomes between 2007/08 and 2015/16. As shown in their graph (below) the outlook was grim, with every income group worse off by 2015/16 under almost every scenario. The sole exception was a small number of people at the bottom end whose incomes would rise slightly if the government abandoned its welfare reforms (are you starting to see a pattern here?).


In 2011, the IFS argued that people in the middle and high income brackets had already seen their incomes fall whereas the worst was yet to come for lower earnings. For 'those towards the bottom,' they said, who were 'dependent more on benefit incomes, falls in income will happen largely between 2010–11 and 2015–16'.

The Resolution Foundation struck a similar note in a 2011 report which predicted that incomes would remain below pre-crash levels for the rest of the decade and that incomes would fall to twentieth century levels for many poorer groups (see below).


This was followed in 2012 with the Resolution Foundation's Gaining From Growth report which predicted lower incomes for everybody except the rich. 'Even on optimistic growth assumptions,' they said, 'low income households in 2020 now look likely to have incomes 15 per cent below those in 2008'. They predicted that middle income households would have incomes three per cent below 2008 levels while richer groups would see a rise.

It is too early to categorically debunk the Resolution Foundation's forecast for 2020, but Office for National Statistics data allow us to put the IFS's predictions to bed. As the graph below shows, there was income growth across the distribution between 2007/08 and 2015/16 with the exception of the richest fifth who saw a 3% decline. The poorest fifth saw the biggest rise: 13 per cent above pre-crash levels by 2015/16.


As the ONS notes, median incomes are already £1,000 higher than they were before the crash :

'After taking account of inflation and changes in household structures over time, the median disposable income has increased by £600 (or 2.2%) since 2014/15 and is £1,000 higher than the pre-economic downturn level observed in 2007/08.'

It seems to me that Office for National Statistics data should be more prominent in public debate than speculation from think tanks, but that is not how it works. I suspect that many people would be surprised by the evidence shown in the ONS graph above. Similarly, many people would be surprised to hear that rates of poverty and inequality have fallen in recent years. These are verifiable facts and yet it was the Resolution Foundation's hunch that inequality might finally rise that made the front pages this week.

In all fairness, economic forecasting is not easy. For a start, you have to rely on forecasts from other organisations about such variables as GDP, unemployment and inflation - and these are often wrong too. But the IFS/Resolution forecasts have not just been wrong, they have been woefully and utterly wrong. We were told inequality would rise. It fell. We were told poverty rates would rise. They fell. We were told incomes would fall. They rose. We were told the rich would do better than the poor. They did worse.

This is a less effective system than flipping a coin. It suggests something more than bad luck. It suggests a systemic bias towards doom and gloom.

A forecast is only as good as the assumptions it is based on and one of the flawed assumptions of the IFS and Resolution Foundation reports is the belief that benefit cuts will necessarily result in lower incomes for those who are on welfare. But this does not account for people changing their behaviour as a result of incentives. One of the reasons income growth has been particularly strong among the poorest fifth of households is, as the ONS has explained, that people have come off benefits and gone into work - and work pays more than benefits.

Now the Resolution Foundation and IFS are back again, without a word of contrition, to double down on their forecasts for 2020. This time, they tell us that living standards/poverty/inequality are going to get worse because Brexit-inspired inflation will wipe out the effect of wage increases. Anything is possible, of course, but it is equally possible that employers will take inflation into account when offering pay rises. Businesses do this when inflation is in double digits so it does not seem unthinkable that they will to do it if inflation rises to the dizzy heights of two or three per cent (it is currently 1.6 per cent).

I am aware that I am leaving a hostage to fortune by writing this post. The economy could go belly up at any minute due to some unforeseeable shock and I'll be left with egg on my face, but we are talking here about probabilities. I believe it is probable that real incomes will be higher in 2020 than they are today and that absolute poverty will be lower. I make no prediction about the nonsense of relative poverty and I don't care about inequality, but if the economy continues to grow, it would be surprising if the IFS and Resolution Foundation are correct in their predictions.

Real incomes track GDP very closely (see section 4) and the historical record shows that growth is more likely than recession in any given year. The rate of inflation or the state of the welfare system have a trivial effect on real incomes in comparison to GDP growth. A rising tide lifts all boats. If you had picked any year at random from the last two centuries and were forced to bet on whether incomes would rise or fall in the next decade, you would be a fool to bet on a fall.

Friday, 3 February 2017

Cider and lies

The Alcohol Health Alliance are calling for higher taxes on strong cider again. Thanks to the peculiarities of Britain's alcohol duty system, it is true that cider is somewhat under-taxed.While beer is taxed at around 18p per unit and spirits are taxed at 28p per unit, cider is taxed at 8p per unit, unless it is 'strong' in which case it is taxed at 7p per unit, unless it is sparkling in which case it is taxed at 34p per unit.

This is not very logical, to say the least, but British cider makers have a lot of influence in the marginal constituencies of the south-west. In 2011, the government responded to concerns about street drinking by taxing strong beer and cider - defined as anything over 7.5% - at a higher rate. Predictably, this led to a glut of ciders being produced at exactly 7.5%.

The Alcohol Health Alliance therefore have a point about some ciders being undertaxed. A rational tax system would raise tax on cider and lower tax on other drinks. Ideally, all units of alcohol would be taxed at a rate that allowed the government to claw back the £3.9 billion it spends in England dealing with alcohol-related crime and ill health.

This would require a unit tax of 9p, but that is not what the AHA are demanding because they are not concerned about having an equitable tax system, they just want to stop people drinking. They naively believe that if you put up the price of the drinks favoured by alcoholics and street drinkers, you will tackle alcoholism and street drinking.

But, unless you tax alcohol by the unit, there will always be one drink that is cheaper than another and that is the drink that people with alcohol problems will gravitate to. It used to be meths and hard liquor, then it was strong beer. These days it is strong cider. If taxing strong cider makes some other drink become the cheapest choice, that is what people will turn to.

You don't address the causes of alcohol problems by making certain drinks more expensive. All that happens is that people with alcohol problems have less money for other things. As the apocryphal Russian father said to his son when the boy asked him if Gorbachev's tax on vodka means that he would stop drinking: 'No, it means that you will stop eating.'

This being the Alcohol Health Alliance, the demands for higher taxes rest their head on a pillow of lies. There are too many falsehoods and half-truths in their press release to fisk in detail but two whoppers stand out:

... one in five of all hospital admissions are alcohol related, while 70-80% of people attending A&E at peak times have been drinking.

Where do they get this stuff from? The Office for National Statistics says there were 1.1 million alcohol-related hospital admissions in 2014/15 under the 'broad measure' - and it is a very broad measure indeed. Under the more credible narrow measure, there were 330,000 admissions, of which just over 100,000 were wholly attributable to alcohol.

In the same year, there were 18.7 million hospital admissions, so alcohol-related admissions made up 1.8 per cent of the total or, if you insist on using the broad measure, 5.9 per cent. Neither figure is anywhere near 'one in five'.

As for '70-80% of people attending A & E at peak times have been drinking', this seems to be aimed at perpetuating the tabloid myth that Friday and Saturday nights are peak times for A & E. In fact, they see fewer attendances than average, as I explained in Alcohol and the Public Purse...

Friday and Saturday nights are not the busiest time for A & E departments. For example, in 2012/13 there was an average of 182,612 A & E attendances between 11am and noon on Tuesdays, compared to 73,738 attendances between 11pm and midnight on Saturdays. 

Even if weekend evenings were 'peak time', there is no evidence that 70-80% of attendances are alcohol-related. 'Public health' charlatans sometimes point to a study of A & E services in Newcastle to claim that over 70% of weekend attendances are alcohol-related but this is piffle. The study actually showed that fewer than 20% of weekend attendees had been drinking, with 12-15% being the overall weekly average. The number of attendees who had been drinking only exceeded 50% for a few hours between midnight and 4am at the weekend, but this is not 'peak time' and most sober are asleep at this time. Furthermore, the mere fact that the attendees had been drinking does not automatically mean that they were there for an 'alcohol-related' reason.

So, basically, the Alcohol Health Alliance are lying. No change there, then.

Thursday, 2 February 2017

Sugar taxes in the real world

Dr Jayson Lusk has a review paper in the current issue of the International Journal of Obesity which is well worth reading if you have access. It is the most succinct explanation of why it is folly to use economic levers in an attempt to control obesity. A few quotes below highlight some of the main points.

On price elasticity and hurting the poor...

A number of public health professionals have advocated for various forms of taxes on fat, sugar, or other ―unhealthy ingredients (e.g., 18, 19), and a variety of locales have implemented such taxes. Presuming a downward sloping demand curve, an increase in the price of sugar or fat will likely lower consumption of these items, but the key question is: by how much? It is inappropriate to focus only on the own-price elasticity of demand. There are substitutes for, say, taxed sodas, such as milk, juice, or beer. The availability of caloric substitutes will lower the weight impacts of a tax beyond that implied by the own-price elasticity (20). That is one reason why some analyses show that only across-the-board food taxes will significantly affect weight (21).

A problem with food taxes is that they are regressive because the poor spend a higher proportion of their income on food than the rich. Because of concerns over regressivity of food taxes, others have proposed subsidies on health foods like fruits and vegetables. While such subsidies can improve uptake of such foods (22), questions about cost-effectiveness remain as do concerns about equity. Muller et al. (23) show that both unhealthy food taxes and healthy food subsidies favor higher income consumers. They find that unhealthy food taxes increase prices paid more for low than higher income women and that healthy food subsidies reduce the prices paid more for higher than lower income women.

On why computer models fail to predict the impact of sin taxes on obesity correctly...

... An issue often overlooked in economic analyses of ―fat taxes relates to metabolism. Metabolically, one must translate changes in consumption caused by a tax to changes in weight to fully appreciate the impacts of taxes or subsidies. The most common approach taken in the economic literature is to apply some version of the simply linear rule that ―3500kcal = 1 lb. However, as shown by Thomas et al. (26), the rule overstates actual weight losses resulting from a reduction in caloric consumption. These and other reasons help explain the seeming paradox that simulation models show sugared soda taxes to have pronounced effects on obesity prevalence, when actual variation in soda taxes across locations seems to have had no impact on body weight in the ―real world (27-30).

On why taxes on food and drink reduce consumer welfare...

... More fundamentally, it is useful to return to the conceptual basis being used to assert that sugar or fat taxes increase consumers‘ welfare. Taxing food or soda is analogous to reducing consumers‘ real income, which harms the consumer under the standard economic modeling framework (i.e., consumers do not like to pay higher prices). Even if taxes induce a change in body weight, presumably many consumers already consider health impacts when they choose what to eat and drink. If consumers suffer from an aforementioned behavioral bias or lack of information, it is possible to construct a model in which a soda or fat tax benefits the consumer. For example Lusk and Schroeter (34) showed that if consumers ignore future health impacts at the time of purchase, a tax can increase consumers‘ long-term welfare but only in the limited case when prices are very high and where the only consumption taking place is because ultimate health impacts are ignored.

It is true that taxes are required if we are to have public roads, public schools, and national defense. However, the typical economic approach is to identify taxes that create the least deadweight loss, with additional considerations given to tax progressivity. Even if revenue from ―fat taxes could be directed toward health education programs, it is far from clear that these sorts of taxes are the most efficient way to fund such education. Moreover, one would need to show how the deadweight loss of the tax is offset by the benefits of extra information; however, evidence on the monetary benefits of such proposed education programs is typically assumed rather than carefully estimated.

He concludes as follows:

This article presented a somewhat pessimistic view on the ability of government policy to substantively influence obesity prevalence. Obesity is a complicated and multifaceted issue. So too are the effects of anti-obesity policies. One response is to argue for an all-out ―war on obesity. It probably true that government policy mandating what farms grow, restricting the supply and type of food to consumers, and controlling prices, offerings, and advertisements by food manufacturers could reduce obesity prevalence. But, is this the type of coercive society in which we‘d like to live? Society faces very real tradeoffs between economic freedom, technological progress, and obesity prevalence. These sorts of tradeoffs are the unfortunate, but they reflect very real constraints to effective economic policy making.

The same issue of the journal carries an article by Martin Binks and Shao-Hua Chin which is also well worth reading. In particular, I was pleased to see that they have noticed the tendency of sugar tax campaigners to focus on changes in consumption when their predictions about obesity fail to materialise:

...clarity is needed in defining a priori what is or is not a reasonable and or desirable impact of obesity policy interventions. A most recent example can be found in the various regional efforts to reduce sugar sweetened beverage (SSB) consumption as a way of impacting obesity in France, Brazil, Mexico and more recently in Berkley California. In each case the stated primary goal was to impact obesity.

However, as the results were presented in the literature and summarized in a recent meta-analysis it is evident that there was no significant impact on BMI in terms of the actual population-based studies. Furthermore, simulations based on available data identify only a minimal potential impact (fractions of BMI points).

As a result of this failure to impact BMI, the dialogue has shifted towards highlighting reductions in consumption as an indicator of success. While the broader implications of this assumption are beyond the scope of this paper, it is important to note that

1) the goal was to impact obesity, this did not happen even over reasonable time periods
2) By focusing towards a secondary endpoint as a success, we may miss a real opportunity to uncover why consumption dropped yet BMI remained unchanged.

In short, it is necessary to consider why this primary endpoint was not met, and develop new approaches that will impact obesity, as opposed to defending those that have proven ineffective. The challenge faced is one involving the willingness to objectively evaluate the science (even when it opposes strongly held ideological beliefs), and to pursue comprehensive evidence-based solutions to obesity and the policies that may support them.




Wednesday, 1 February 2017

Shameless BBC bias



The BBC has been running what amounts to a campaign today. I have rarely made an official complaint but I decided to do so on this occasion. This is an extended version of what I said (the BBC complaints form limits the word count)...
 

Your coverage of the debate about whether to ban smoking and so-called 'junk food' in and around Welsh hospitals was in clear breach of the BBC's obligation to be impartial when covering controversial issues.

The report, which appeared on the BBC website on 1 February 2017 and was written by Rachel Flint, discussed BMA Cymru's call for smoking to be completely banned on NHS property outside hospitals, regardless of the wishes of the hospital manager. It also covered an additional demand from the National Obesity Forum for food that is high in fat, salt or sugar (HFSS) to be banned from sale in hospitals.

These are controversial issues that will affect many people, including staff and visitors, but the BBC makes no attempt to quote those who oppose either of these policies, nor does it make any attempt to discuss the negative consequences of these policies, such as the restriction of freedom, the restriction of choice and the cost of enforcement.

Dr Phil Banfield of the BMA and Mr Tam Fry of the National Obesity Forum are quoted at length without any contrary opinion being offered. It is unclear why the BMA (a trade union) and the National Obesity Forum (a tiny pressure group) merit unopposed media coverage.

I have no doubt that opposing views could have been found if the BBC had been inclined to find them. Indeed, it would be easy to find people who believe that the Welsh proposals go too far as they stand, let alone that they should not go any further.

It should also be noted that the term 'junk food' - which was used without quotation marks in the story's headline - is a campaigners' phrase that has no scientific definition. The proposed ban would actually affect food classified as HFSS, a broad category of food that includes many products that are not generally considered unhealthy, such as cheese. The implications of banning such a wide range of food products are not mentioned in the report.

The news report was accompanied by a video lasting 1 minute 45 seconds in which everybody interviewed was in favour of a total smoking ban on hospital grounds. Again, there was no opposing view, nor any hint that opposing views exist.

This news report was promoted throughout the day with tweets from BBC Wales News which were as one-sided as the article. Tweets included '"Everybody has the right to breathe fresh air" Bosses are worried about smoke drifting into wards', 'Should hospitals be "role models" for healthy living' and 'With junk food sold and bosses powerless to stop people smoking outside, are hospitals really "places of health"?'

The most extraordinary tweet was sent at 1.30pm and read 'Is it time to stub out the fags at hospitals for good - with no exceptions'. It was accompanied by a video that could easily be mistaken for a promotional film produced by anti-smoking campaigners. The video begins with the words 'A new law could finally BAN smoking at all Welsh hospitals'. The word 'finally' strongly implies that such a ban is overdue. This, of course, is opinion.

The video goes on to explain that a clause in the proposed law would allow smoking in designated areas. Given the endless difficulties experienced by hospitals that have attempted to enforce a total outdoor ban, many people would agree that designated smoking areas (away from the main entrance) are a reasonable solution that respect the rights of smokers and nonsmokers alike. Such people are not given a voice by the BBC, however. Instead the video cuts to a group of Year 8 school pupils who 'think it's time for a change'. They are pictured saying 'Please don't smoke outside our hospitals' in unison and the video ends with the (apparently rhetorical) question: 'Is it time to stub out smoking at hospitals for good?'

Nobody in the video makes the case for designated smoking areas (let alone for having no outdoor ban at all) and none of the arguments against the ban are mentioned. The use of children is the crudest form of propaganda. These children are too young to understand the issues involved and had clearly been prompted to say what they did.

This is just the latest in a long line of BBC stories about smoking, diet and alcohol that reveal an obvious bias towards regulation that many of us feel is heavy-handed, unnecessary and illiberal.

The BBC claims that: 'Impartiality lies at the heart of public service and is the core of the BBC's commitment to its audiences.' It says that its output 'must be inclusive, considering the broad perspective and ensuring the existence of a range of views is appropriately reflected.' It rightly notes that the BBC Charter requires it to 'ensure controversial subjects are treated with due impartiality in our news and other output dealing with matters of public policy or political or industrial controversy.'

There is no hint of impartiality about the way it has covered this, and many similar, issues.


UPDATE

It seems that the BBC's Rachel Flint has a strong view about these things. Perhaps she should leave her opinions at home?