Are minimum alcohol prices a simplistic response to cheap booze culture?

Introducing a minimum price for alcohol is back in the news today, with claims that the government is planning to back-track on its commitment to introduce a minimum price of 45p per unit of alcohol.  This is perhaps not surprising since the case for its introduction has never been made with any degree of clarity and it is relatively easy to provide evidence for very mixed and perhaps undesirable impacts.  For example it is clear that the tax will have little impact on the price of alcohol sold “on-licence” where the average price of alcohol is already £1.16 per unit.  It’s also unclear whether the tax will target the people who really matter.  Perhaps surprisingly, highest alcohol consumption occurs amongst people who are classified as being in “high managerial” occupations and the lowest levels are amongst the unemployed.  Because the unemployed tend to consume cheap drink however, they will bear more of the burden of the minimum price along with people in the North East, single parents and the over sixties.

There is no doubt that for many individuals alcohol consumption is dangerously high, and that the trend in alcohol consumption is worrying.  Using price to tackle this is attractive because virtually everyone understands the law of demand: price up, quantity down. But the apparent simplicity of this law is deceptive: first because changes in quantity are marginal, people with high levels of consumption continue to drink a lot, just a bit less than before; and second, because people will substitute some of the reduction in more expensive spirits with wine for which the price doesn’t change.

We should recognise that drinking is a deeply cultural activity and for some it is undoubtedly a form of self-medication. Attempts to address the problem should be framed accordingly.  Like smoking, real progress will only be made when it is clear that high levels of alcohol consumption are culturally unacceptable.  Further, increasing the financial pressure on those that are least able to cope with it may worsen the problems that lead to self-medication.

There is no doubt that we should remove the “cheap booze” culture from society and that doing so will save lives.  The question remains however as to whether putting the price up is too simplistic a way of addressing this problem.