Monday 15 October 2012

Alcohol: affordability vs inflation

Temperance campaigners frequently talk about how alcohol has become more "affordable" in the UK since 1980. Many people—including a worrying number of journalists and politicians—infer from this that alcohol has become cheaper.

To give one of many examples, here's the West Lothian Tobacco, Alcohol and Drugs Partnership (emphasis in the original):

In Scotland and the UK, alcohol has become greatly cheaper to buy over the last 20 years, particularly in the off-sales sector.

No it hasn't. Britons have become wealthier. For the record, alcohol has become more 45% more affordable since 1980 while becoming 24% more expensive in inflation-adjusted terms. See Statistics on Alcohol: England, 2012...

The above is taken from an NHS document, so it is puzzling why the NHS makes mislading statements elsewhere, such as:

However, over the last 30 years, the UK has become wealthier and alcohol has become cheaper.

Words have meanings and it is important to get them right. Affordability has a distinct meaning—it is the real price divided by average income. Real price also has a clearly defined meaning—it is the average price adjusted for inflation.

It seems to be only alcohol that is consistently discussed in terms of affordability rather than actual price. We don't talk about eggs, houses or oil in terms of affordability. There is a weird implication in the discussion about alcohol affordability—that 1980 was in some way the natural or optimal year for booze pricing and that we should return to it.

There is also a peculiar reluctance to look at different income groups. It is well known that low income groups have seen their earnings rise at a slower rate than those on median incomes and at a much lower rate than top earners. The affordability of alcohol for those low income groups is therefore significantly lower than the average. This may explain why the counterfeit alcohol market is on the rise despite supposedly rising affordability.

Whatever the case may be, we need to get our facts straight. Alcohol has emphatically not got "cheaper" over time. On the contrary, successive sin taxes have made it more expensive.


Ivan D said...

I predict that alcohol is about to become even "cheaper" this year:

Anonymous said...

In addition, no account is made of the extra things it is now "necessary" to spend your money on, which didn't even exist in 1980. You can get by in 2012, for example, without a mobile phone, a computer, a broadband internet connection, cable/satellite television, just as you got by without them in 1980, but you'll be missing out on much that society now deems essential for negotiating 2012's environment. So even the "affordability" argument falls down because the extra money apparently available for buying booze with is beingh spent on other things instead.