Tim Worstall has already picked up on the implicit belief that minimum pricing will raise the dead from their graves. A cretin named Valerie Vaz (whose speech has to be seen to be believed) made the absurd, unsourced claim that "the police ... have to clear up the mess on Saturday evenings at a cost of £13 billion." The bizarre myth that minimum pricing will cost moderate drinkers only £12 a year was repeatedly cited, and when Wollaston took the floor she showed herself to be incapable of understanding the difference between private and public costs, tangible and intangible costs, and internalities and externalities.
Sarah Wollaston (Totnes, Conservative): What about taxpayers? The cost of the epidemic is out of control. It is at least £20 billion...
Really? The actual cost to the taxpayer is "at least £20 billion"? Just to make sure that wasn't a slip of the tongue, let's look at Wollaston's op-ed at Politics Home yesterday...
Mortality is increasing and also the cost to tax payers; at least £20billion.
Yup, that's what she claims and that is what she told the mother of all parliaments. This would be a reference to the British Cabinet Office report of 2003 which found a total social cost of around £18-20 billion.
Of these costs, £4.7 billion were intangible costs (ie. they are hypothetical - they do not need to be paid by anyone, let alone the taxpayer).
A further £5.5 billion were lost productivity costs which, again, do not represent a bill that needs to be paid.
A further £5.1 billion were private costs related to crime which, once again, do not need to be recouped through the tax system, and the author of the report stressed repeatedly that these costs were at the absolute top end of any realistic estimate.
The only costs which can be considered as "to the taxpayer" are £1.7 billion in healthcare and £2.2 billion in crime and punishment, but since the exchequer receives £9 billion a year in alcohol duty, that hardly makes a compelling case for a compensatory sin tax, does it? (Minimum pricing, as currently proposed, would not compensate the treasury in any case.)
...but if we look at the finer details of the impact on productivity, we will see that the evidence given to the Health Committee when it looked at this issue showed that the cost could be as high as £55 billion
This a reference to a report from the National Social Marketing Centre (Lister, 2007) which sadly is not available online, but I have a copy as I requested it last year.
£16.1 billion of these 'costs' are intangible—imaginary evaluations of life years forgone.
£5 billion are private healthcare costs.
£5.8 billion are private costs related to crime.
£8 billion is the amount spent on "misused" alcohol by consumers (yes, the money drinkers spend on drink is counted as a cost to the taxpayer in Wollaston's world).
Your "lost productivity" makes up £7.3 billion, but who pays this? At a push you could say the drinker pays it, but it's really just income forgone so nobody pays it. Certainly, the taxpayer is not left to pick up the bill. Even in the loosest definition, this is a further cost to the drinker, not the state.
This leaves £6.6 billion as a legitimate cost to the taxpayer. That figure is highly inflated for various reasons and does not include any benefits from alcohol, but it still remains lower than the £9 billion received by the treasury in alcohol duty. So even using these highly dubious figures, drinkers are subsidising teetotallers. From a purely economic standpoint, Wollaston should be petitioning for a maximum unit price.
I have much, much more to say on the subject of crooked cost-to-society estimates and will do so in a paper for the ASI in April. Every figure given by politicians and pressure groups which purport to show the cost of obesity, drinking and smoking wrongly portrays intangible private costs as financial public costs and portrays expenditure by consumers as a cost 'to society'. They are riddled with double-counting, they conspicuously fail to include benefits (such as duty paid) and they are designed only for advocacy.
But as bad as they are, none of the researchers who compile them would ever claim that alcohol costs the taxpayer anything close to £20 billion, let alone £55 billion.
And that is just one of the reasons why Sarah Wollaston
UPDATE:
Still more ignorant is Kevin Barron, who said in the House last year:
We took evidence that the cost to the NHS could be as high as £55 billion a year.
Considering the entire NHS budget was £106 billion in 2011/12, you'd have to be out of your mind to think that £55 billion was spent on alcohol-related diseases. In fact, the high-end estimate is just £2.7 billion.
The situation is similar to that with tobacco: in the end, no one really knows the cost of the use of these products.
Especially our elected representatives...
PS. Eric Crampton has done some outstanding work picking these cost-of-drinking studies apart. This must-read paper relates to Australia and New Zealand but the dodgy methods are just the same as those used in the UK. (Short version here.)
