The cost of alcohol

August 26th, 2012 at 11:12 am by David Farrar

inserts some facts in a Press op-ed:

I do not particularly care what the jury decides on who is or is not a wowser. But I work with and care about the numbers around policy. And the impression most readers would get from the latest reporting in  is a bit at odds with, well, reality.

Let us begin perhaps with Jennie Connor’s citing of “a Canadian study” on the effects of minimum pricing. Can a 10 per cent increase in the minimum price of alcohol really reduce total alcohol consumption by 16 per cent? No. …

Across-the-board increases in the minimum price of alcohol have far smaller effects: a 10 per cent price increase reduces aggregate consumption by only about 3.4 per cent, as is made reasonably clear in Auld’s paper.

But the bigger mis-use of numbers follows:

I was a bit more surprised to read of the new commissioned report on the health costs of alcohol in Canterbury. …

BERL here replicated work done in Australia by Collins and Lapsley (2008). But where Collins and Lapsley added up all the costs imposed by those disorders where alcohol makes things worse and subtracted from that total all the cost savings from those disorders where alcohol reduces costs, BERL simply erased any beneficial effects of alcohol for disorders including ischaemic heart disease, cholelithiasis, heart failure, stroke and hypertension. …

I received the paper Wednesday courtesy of the CDHB. And BERL, at footnote 14, reports they’ve done the same thing again: “The Collins and Lapsley fractions indicate some alcohol use may be beneficial for some conditions. We concentrate on harmful drug use, and assume zero fractions for such conditions.”

So their measure of the costs of alcohol to the Canterbury health system relies on an assumption that there can be no health benefits from alcohol – an assumption that runs contrary to the weight of international evidence. Assuming one’s conclusions is hardly proper method.

To put it more bluntly the BERL paper is useless as a public policy tool.  Measuring harm without measuring benefits is something zealots do, but we expect better in scientific papers.

Crampton concludes:

How often do you read that problem drinking among 15-24 year olds was no different in 2006/2007 than in 1996/1997 before the change in the alcohol purchase age?

Or that per capita alcohol consumption is down substantially since 1991? Othat light drinkers have about a 14%reduction in their chance of dying from any cause than people who never drink, correcting for the host of other health-related behaviours that are usually given as reasons for ignoring the health benefits of moderate drinking?

Be skeptical of the moral crisis around alcohol.

Amazing to see the comments at The Press attacking Eric personally or attacking things he never said. Very few able to engage on the actual issue.

5 Responses to “The cost of alcohol”

  1. dog_eat_dog (1,025 comments) says:

    Ah BERL. Why do public organisations hire these clowns when it comes to dealing with alcohol issues?

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  2. beautox (498 comments) says:

    What I found scary was the display of sheer ignorance on display in the comments of Eric’s article at the Press. People who can’t read and can barely write.

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  3. TM (103 comments) says:

    The cost of alcohol should take into account the indirect costs and benefits to society. So this may include some health benefits, but it should also allow for the increase in ambulance and police officers to deal with alcohol related issues.

    Unless this externality is taken into account, the taxpayer will be subsidising the use and abuse of alcohol.

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  4. swan (761 comments) says:


    Agreed. Apparently duty on alcohol more or less covers those costs.

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  5. Crampton (224 comments) says:

    @dog: I suppose it depends what you’re after.
    @beautox: Suspect they’re in the pay of Big Nanny.
    @TM: The new BERL one is only on health costs; their prior work included all the other stuff. Including drinkers’ own expenditures on alcohol and the excise component thereof.
    @Swan: Ballpark – after we fixed an error, we got a number a bit over that year’s excise. But on any econ case, we need analysis at the margins, not totals. “Total Cost of Blah to Society” doesn’t tell you much about anything, especially something like alcohol where there are so many nonlinearities in cost with consumption and excise regimes only able to set per unit taxes. You need the marginal social cost and marginal social benefit of the last units consumed to have any kind of guide for policy. Nobody’s done that work though.

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