What Price for an Extra-ordinary Commodity?

The Scottish Government can make laws independently of the London (Westminster) government, but taxation within the UK is not devolved. Thus, the Scottish Government, when proposing measures to reduce harm from alcohol, cannot raise alcohol-tax to increase the price of alcoholic beverages. Instead, especially to reduce the sale of very cheap alcoholic beverages such as industrial cider (Gill et al., 2010), it has proposed legislating a minimum price per unit (e.g. £0.40 or £0.50 per 8 g ethanol; £1 = 1.6 US$ or 1.2€). Very cheap alcohol has been increasingly used as a loss-leader (sold at below cost to attract purchasers of other products) by UK grocery retailers: it has even been reported that the sales tax (VAT) on promotional offers is reclaimed by the retailer because such offers are advertising. (‘taxpayer picks up cheap booze bill’: Bayer, 2009.) However, the government party (Scottish National Party) does not hold a majority in the Scottish Parliament and, at a recent first-stage ballot, the proposal was rejected. One objection raised by opposition parties is that minimum pricing as a tool to reduce alcohol harm has no basis in evidence. Strictly speaking, this appears to be correct, according to the new edition of ‘Alcohol – No Ordinary Commodity’ (Babor et al., 2010) which was given its UK launch in London recently. But as stated by the authors (Professors Babor, Edwards and Casswell), the evidence is very strong that price change—in either direction—affects population alcohol problems. Minimum pricing has not been tested and there are no natural experiments to learn from, although price manipulation is known to cause shift between beverage types, strengths and brands. Opposition parties had not been swayed by the modelling study, based on the existing data on price elasticities, showing that minimum pricing was highly likely to result in reduced alcohol harm (Purshouse et al., 2010). Another objection raised by Scottish opposition parties is that the poorest in the population will be unfairly affected, perhaps spending money on alcohol that they might otherwise spend on their families. At the launch, Professor Casswell recognized the association between social deprivation and heavy per session drinking and harms, but reminded the questioner that reduction of alcohol harms in such communities could help some escape the reiteration through generations of that deprivation. When price changes in the opposite direction, the socially deprived are the most affected, as was seen in Finland when the price of alcohol fell a lot in 2004 and the increase in alcohol-related mortality was chiefly experienced among the less privileged (Herttua et al., 2008). A third objection is the spectre of substitution. While there is evidence at an individual level that heavy drinking can be replaced by use of other intoxicants, at least among extreme drinkers, at the population level there seems less evidence for substitution. This matter is debated by Moore (2010), Ludbrook (2010) and Humphrey (2010) in this Issue. Also in this Issue, Gustafsson (2010) shows that greater access to cheaper alcohol in southern Sweden did not have the expected effect of increasing problems, at least not self-reported social problems. Nevertheless, rates of hospitalisation for alcohol problems were increasing, and there were important differences in the effects in different socio-economic groups. Attention particularly to that latter phenomenon is recommended by Romelsjö in his Commentary (2010). Our November Issue will publish further papers on price and policy. Go to our Advance Access (http://alcalc.oxfordjournals.org/papbyrecent.dtl)* to see how UK affordability calculations might be modified (by Rachel Seabrook), and how minimum pricing of vodka in 2010 in Russia has evolved (the third in our series of Letters from Russia by Sergei Jargin). In the meantime, the alcohol beverage industry funds educational programmes, for which Babor et al. find no evidence of efficacy as a tool to reduce alcohol-related harms. On the other hand, intense advertising and promotion of alcoholic beverages continues in many countries. For young people in the UK, Gordon et al. (2010) in this Issue show a clear association between exposure to advertising, and subsequent recruitment to drinking.