Wednesday, 18 September 2013

The scream test

Imagine two policies.

Policy A would have government nationalise all liquor companies and distribute their product, for free, for anybody who wants some, with costs borne out of general taxation. There would be no compensation of the liquor companies.

Policy B would strengthen alcohol intervention programmes for prisoners with alcohol abuse problems. They'd spend a fair bit on it and work hard with prisoners, both while in prison and during their re-integration back into the community, to help them to avoid falling back into substance abuse.

Now Alcohol Action NZ proposes a "scream test" to tell whether some proposed policy would reduce alcohol harm. In their model, industry profits are increasing in the harm imposed by alcohol, and industry screams when profits are threatened. Anything that reduces harm reduces profits, so the scream test tells us which policies are likely to reduce harm.

I suggest instead that industry would scream a lot about Policy A, and would likely support Policy B. I also suggest that Policy A would increase harm and Policy B would reduce harm. Note further that National is already implementing something like Policy B - kudos to them. I've yet to hear screams from industry.

The scream test is a bad one. Profits are perhaps increasing in total consumption, but they're likely decreasing in alcohol's harms not only because of the policy reaction function but also because moderate consumers' consumption is likely decreasing in perceptions of harm.

The one spot where Sellman's scream test could be right would be policies potentially hitting the very heaviest consumers. There are discrepancies between median reported consumption figures and total alcohol available for consumption suggestive of that there is a small group consuming booze by the barrel. Policies disproportionately hitting that group could potentially reduce both harm and profits. But I hardly expect that mandatory 1 am bar closing times fit the bill.

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