Monday, 10 February 2014

Minimum pricing and the magic 4p

Yet another version of the Sheffield minimum pricing model and yet another shed load of media attention. (This, from the people who claim that "we can’t really change the narrative in any way—we don’t have that power—but bodies such as the Adam Smith Institute have this public megaphone"!)

The 2009 Sheffield model claimed that minimum pricing would save 2,040 lives in its tenth year. In 2013, it said it would save 624 lives. The latest incarnation says 860 lives. It doesn't really matter what number they conjure up. It's all fantasy modelling based on misconceptions such as the belief that alcoholics are more responsive to price increases than moderate drinkers and that there are no substitution effects or unintended consequences from ratcheting up prices.

The real objective of the Version 2.6 is to make people think that a policy that deliberately raises the prices of drinks that are disproportionately bought by the poor is—honest guv'nor—not regressive and that "respectable people"—as one self-proclaimed socialist calls them—have nothing to fear. The emerging myth is that minimum pricing will, as the Daily Mail puts it, "barely affect sensible drinkers".

The most eye-catching figure in the study involves the risible claim that moderate drinkers on low incomes will only pay an extra four pence—yes, 4p!—as a result of a 45p minimum price. 4p a day doesn't sound enough to make anyone change their behaviour, does it?

But it's not 4p a day. It's 4p a year! According to the Sheffield modellers, this annual sum—which even the poverty-stricken wouldn't bother looking down the back of the sofa for—will magically lead to a drop in alcohol consumption amongst that group of 1.6 per cent (which is also, oddly, what they think the decline will be over the whole population).

To state this ridiculous proposition is to refute it, but a few points need to be made:

1. If minimum pricing comes in, there is no chance that it will be at 45p per unit. Scotland is aiming for 50p per unit. The British Medical Association wants 60p. And when the policy inevitably fails, you can be sure the medical temperance lobby will be calling for dramatic rises in the minimum price. Any study that looks at a 45p unit price is bound to underestimate the cost and is irrelevant to the political debate.

2. The Sheffield researchers' definition of an average moderate drinker on a low income is someone who drinks 4.6 units a week. This is the equivalent of one pint of premium lager on Friday, another one on Saturday and nothing for the rest of the week. I will allow you, dear reader, to be the judge of whether you consider that to be credible premise.

3. They use alcohol consumption figures from 2009 to make their estimates. Alcohol consumption has fallen by considerably more than 1.6 per cent in the intervening years without anyone noticing a decline in alcohol-related mortality.

4. Amongst people who are supposedly 'harmful drinkers', the Sheffield researchers claim that most will save money from minimum pricing. The poorest group, for example, will spend £34.63 less per year and yet will also reduce their consumption by 7.6 per cent. Not only will higher prices make these heavy drinkers decide to cut down on their drinking, but they will reduce their entire drinking budget! What alchemy is this? Only the richest group will be 'hit'—to the tune of £16.35, which is chicken feed, and this group will also reduce their consumption (by 1 per cent). Again, I leave it to the reader to consider whether he or she finds this remotely likely.*

The Sheffield modellers retreat ever-further into a world of make believe. It is a world in which the loss of 4p a year (0.01p per day) has a measurable effect on how much a person spends on alcohol. It is a world in which a magic-bullet policy has a negligible cost while having profound and far reaching benefits. It is another planet entirely and only the social scientists from South Yorkshire live on it.

* This point edited to correct a mistake in the original post.

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