Price hikes and binge drinking

The weekend Press included a feature on binge drinking and price mechanisms.

But does making something more expensive deter excessive drinking?

Professor Tim Stockwell, of Canada's University of Victoria, published a paper last year, drawing on 20 years of alcohol sales data. It showed the shock of raised liquor prices dampened sales significantly. The conservative estimate was that, for every 10 per cent rise in prices, there was a 3.4 per cent drop in consumption, Stockwell said.

"Alcohol is like all commodities - prices go up and consumption goes down, all else being equal."

However, opponents of the idea, such as Lion, say it is not enough for minimum pricing merely to decrease consumption. It also had to make a difference to the big problem of binge drinking.

A report by Eric Crampton, an economist at the University of Canterbury, concluded that pricing policies were not effective enough to be worth introducing.

It said there was definite evidence that problem drinkers reduced their consumption when prices rose sharply, but the effect was more marked on moderate drinkers. A 10 per cent price rise saw moderate drinkers cut their consumption by 4.4 per cent, against 2.8 per cent among heavy drinkers.

An Auckland University of Technology study, reported in its magazine Insight, also says that price rises as high as 25 per cent had little effect on buying behaviour among students sampled in both Australia and New Zealand.

I don't think I've written any reports on this topic, but I have written many posts citing the Wagenaar metastudy from which the numbers above come. The Press piece here is rather good. They cite the defensible number from Tim Stockwell rather than the version Jennie Connor cited last year.

I'd further add that, while heavy drinkers do respond as noted above, Byrnes et al show that they reduce their consumption on non-binging days rather than doing much to curb binge consumption. As I noted when it came out:

They use Australian household surveys from 2001, 2004 and 2007 to see how changes in alcohol prices affect the number of reported days of no, low, moderate, and high alcohol consumption; they find that while price increases do reduce consumption, they tend to reduce the number of days of low consumption while not changing the number of days of moderate and high alcohol consumption. This would be consistent with binge drinkers dropping the occasional beer or wine with dinner to save up for the big nights out. If policy is more worried about binge drinking than about light drinking, this might matter.