Alcohol purchase age

I caught a fun call from Christchurch Press reporter Joelle Dally yesterday afternoon. She noted that Doug Sellman disputed my figures and that Sellman claimed I was running a political campaign on the issue. Here are the stats I sent back to the reporter by email after a fire alarm on her side of the call cut the interview short. I must have gotten her email address wrong as none of them showed up in today's story. Anyway, here's what I'd sent:

Here are some of the stats to which I'd point. I'm sure that Professor Sellman would find reason to find a crisis in youth drinking in them, but I've a harder time seeing it.

First, I'll point to the figures from The Social Report that showed no increase in "potentially hazardous drinking" in the 15-24 age cohort from 1996/1997 to 2006/2007. Doug would be right that it could be the case that drinking within the "potentially hazardous" range could have changed, either becoming more or less intense, without showing any change in the proportion in that cohort. But it would seem odd if there were one cohort that were just getting worse and worse, without any changes in the proportion of people in that cohort. The Social Report also shows that there were some demographic shifts within the cohort of "potentially hazardous" drinkers: compared to 1996/1997, relatively more youths in that cohort are of European/Other background compared to Maori and Pacific.

Second, I'll point to ALAC's Youth Drinking Monitor. In 1998, before the purchase age change, about 25% of youths aged 14-18 were non-drinkers. That dropped to 14% shortly after the law change (2000).

But, if we look at more recent figures we find (Table 18) that 88% of 12-14 year olds are non-drinkers, 46% of 15-17 year olds are non-drinkers, and 11% of those aged 18-24 are non-drinkers.

Unfortunately, the age groupings make those a bit hard to compare. But look at those numbers and judge for yourself whether it seems plausible that we've had big increases in youth (age <18) access to alcohol since legalization.

The same pair of reports have 31% of youths 14-18 drinking heavily in 1998 (reported 5+ drinks at last occasion) and 30% of those aged 12-24 binge drinking now (4% of those 12-14, 27% of those 15-17, and 44% of those 18-24). Again, youth binge drinking is a problem. But it's harder to say that it's a problem that's worse now than it was prior to the change in the purchase age; the proportions seem pretty similar.

There should be a very strong burden of proof on those who would impose large costs on all kids aged 18-19 who drink responsibly - the gains of potential reductions in bad behaviour have to outweigh the costs we impose on those who aren't causing problems. Again, this can't rule out that maybe each and every one of those binge drinkers have gone from 5 drinks to 50 (or from 25 to 5).

And, as I'm sure Doug Sellman will have made insinuations about it anyway, I have done work for the Australian alcohol industry contrasting the methods used in estimating the social costs of alcohol with methods used in standard economic analysis. This work was conducted through a consultancy grant handled through the University of Canterbury's Research Office and subject to strict conditions around ethical conduct in research and around academic independence. Indeed, the University sent out press releases last year celebrating some of my work in this area; it's hardly been secret.

I have one other statement of pecuniary interest to make. If a split drinking age goes through, I'm going to make money on iPredict; if we go to either 18 or 20, I'm going to lose a lot. I'm a supporter of "Keep it 18", but I expect the split verdict to obtain unless they change the standing orders on how the vote proceeds.

Joelle didn't include those stats but did include a note from Sellman that the Law Commission had considered all this and still thought that there were problems in youth drinking. Look carefully at the Law Commission's review around youth drinking. Leave aside for now the general stuff about that it's bad that kids drink and look to how they treat evidence around the change in the alcohol purchase age in 1999. The Law Commission correctly notes that there was an increase in youth drinking in the year subsequent to the law change. But they don't say much about more recent trends.

At paragraph 16.15 they cite these bits of evidence on changes:

• The year following the law change had an increase in ED presentations by drunk kids
• But if you look at the reports I'm citing above, you find a blip upwards in bad stuff immediately following the law change, which subsequently reversed back to the status quo ex ante. So it wouldn't surprise me if there were an increase in ED presentations in the year subsequent. But if that has followed the same trend as youth binge drinking, it will have reversed.
• There was an increase in youth drink driving related problems subsequent to the purchase age change.
• But New Zealand reduced the drink driving limit to zero percent for kids and massively reduced those kinds of problems.
• "Our officers report bad stuff" reports from the police
• Evidence of increased binge drinking by kids through 2000 or 2002
• nothing about how that trend subsequently reversed back to status quo ex ante.

The rest of the LC's evidence on this question is around how bad youth drinking is in general, not about changes due to the purchase age. And while there's really good evidence from the United States that increasing the drinking age to 21 did a whole lot of good in reducing drink driving by kids, New Zealand seems to have achieved that goal with changes in the drink driving limit for kids. 

I'd also note Di Nardo and Lemieux's work on unintended consequences of the drinking age change in the US:

This paper analyzes the impact of increases in the minimum drinking age on the prevalence of alcohol and marijuana use among high school seniors. The empirical analysis is based on a large sample of students from 43 states over the years 1980 - 1989. We find that increases in the legal minimum drinking age did slightly reduce the prevalence of alcohol consumption. We also find, however, that increased legal minimum drinking ages had the unintended consequence of slightly increasing the prevalence of marijuana consumption. Estimates from a structural model suggest that this unintended consequence is attributable to standard substitution e ffects.

I stand by that there is not sufficient evidential base for imposing large costs on those moderate drinkers aged 18-20.

I also wasn't impressed with the quality of the Law Commission's work around alcohol taxation.

Counting Lewd's utility

It's currently legal in New Zealand to post online racy pictures of your ex. The Law Commission recommends changing that:

The commission also recommends the exemption for personal or domestic information should not apply if the collection or disclosure of the information would be highly offensive.

The change would deal with situations such as when a person posts naked photographs of their ex-partner online without consent.

Privacy Commissioner Marie Shroff welcomed the report. "It will put, for the first time, the careless, the predatory and the criminal on notice," she said. "There will be consequences if you misuse our information."

I'm not particularly opposed to the law change. But I'm near certain that the Law Commission won't have weighed the benefit provided to voyeurs of the current legal framework. David Friedman argues, persuasively, I think, that we have to count all the benefits in the utilitarian calculus lest we wind up assuming our conclusion:

If instead of treating all benefits to everyone equally we first sort people into the deserving and the undeserving, the just and the unjust, the criminals and the victims, we are simply assuming our conclusions. Benefits to bad people don't count, so rules against bad people are automatically efficient. We cannot deduce moral conclusions from economics if we start the economics by assuming the moral conclusion.

It wouldn't surprise me if the utilitarian calculus found the law change to be efficient. Presumably, if the taking of private photographs has benefits for the couples involved, willingness to have such photos taken would depend on the likelihood of future dissemination. Further, some couples that would do better to split up may stay together, inefficiently, because of the hostage problem posed by the photographs' existence. It's entirely plausible that the losses to voyeurs are smaller than these gains. But I rather doubt that anybody's sought to measure either side.

OIA and the Marsden Jacob Report

Some results of a couple of OIA requests.

On 23 September 2009, Marsden Jacob produced a short proposal for the Law Commission outlining the work it could do as part of a "Scoping Study of Optimal Taxation of Alcohol in New Zealand." The Law Commission's "tight timeframe ... precluded a competitive tendering process. ... MJA was invited by the Commission to undertake the work as it has experience in alcohol policy and other social policy issues including gambling and the role of pricing in delivering health outcomes."

Now, if you run a Google Search, you'll find Marsden Jacob Associates. Don't hit the third link on the front page: that's my prior post noting that, with respect to its review of the literature, Marsden Jacob and Associates either is incompetent at basic reading comprehension, or deliberately promulgates lies. I'd guess they're well pleased that that particular line is what's excerpted in the Google search and shows up third on the front page. But scrolling on over to their list of professed expertise on their site, you don't see alcohol anywhere listed. Hitting "alcohol" in their search box: again, nothing listed. But they have been active in the anti-alcohol campaign. Dr. Marsden presented a paper at an anti-alcohol conference also attended by Sir Geoffrey Palmer in August 2009; perhaps that's when Palmer decided they'd be best suited to produce his no-compete, non-tendered report. But, Marsden Jacob has written at least one prior alcohol report, here. Perhaps that plus a friendly chat at an anti-alcohol conference is sufficient for a no-compete contract.

The work proposed, at proposed cost of $28,800 for twelve days' work, would have been "presented in succinct, polished written drafts, but would not be intended, at this preliminary stage, for wider distribution." Dr. John Marsden's letter to the Law Commission continues:

As discussed, a study for wider distribution would require considerably more work to make it able to withstand the anticipated antagonistic and heavily resourced response.

Well, they got the "antagonistic" right.

The limited scoping study included billing for two days of literature review, to be undertaken by Gene Tunny, Senior Economist at Marsden Jacob. And so now I know who was primarily responsible for the literature review.

Sir Geoffrey Palmer's reply of 29 September notes:

I realize that a 'wider distribution' of your study may necessitate a higher degree of quality assurance, and would be comfortable considering an increase in your proposed fees to cover the additional days required for ensuring the work meets your standard for inclusion in our final published report.

Marsden Jacob received the proposed increases - for a total of $60,000 - with the final product to be delivered mid-November. But it certainly didn't take any kind of heavily resourced response to find rather serious problems in their work. Rather, a very cursory reading of their report would have been sufficient for anyone familiar with the ongoing debates here.

I subsequently corresponded with John Whitehead at Treasury, who indicated that Treasury had recommended that the report be subject to independent quality assurance.

I today received an OIA response from Brigid Corcoran at the Law Commission stating that:

Sir Geoffrey asked the Secretary of the Treasury to examine the Marsden Jacob Associates (MJA) report. The Secretary's response to this request is included in the Commission's final report along with the MJA report, as Appendix 1. The Treasury advised that 'some form of independent quality assurance would be prudent' in relation to the reliance in the MJA report on the policy-analytical framework developed at the University of Sheffield. However, the timeframe for the publication of our final report precluded the Commission taking action on this advice. Rather, we included the Secretary's letter along with the MJA report in the Appendix in order to ensure the Government was aware of Treasury's view in relation to this particular aspect of the MJA analysis. It will be up to the Government to commission a review of the MJA analysis should it choose to do so.

Recall the timeline. Law Commission gets the report mid-November and publishes its report end-April. Treasury replies 2 February. And there was no time for an independent review? It took me all of a couple of hours to note that they'd completely screwed up. The first time I saw the report was on its publication; basic professional courtesy suggests providing advance copy. Heck, basic professional prudence recommends it: who better to point out if you've completely screwed something up than the guy being attacked? The best summary of the Marsden Jacob report, with respect to its review of the literature, remains "Marsden Jacob and Associates either is incompetent at basic reading comprehension, or deliberately promulgates lies".

It's also interesting that Palmer has so frequently chosen to cite the Marsden Jacob numbers despite Treasury's noting that the report needed independent quality assurance. Perhaps Treasury should be a little less veiled in its critiques. At some point, Treasury is going to have to start being a little bolder.

Again quoting Birgid Corcoran, this time in her letter of 11 May to Roger Kerr (who sent in one of the OIA requests here noted):

The work proceeded on the basis of Sir Geoffrey's letter and the final MJA report met the Commission's requirement that it be completed to a 'publishable' standard.

An undergraduate student turning in a paper that so severely mischaracterised its sources would receive a stern lecture from me at minimum, but apparently the standards in a Canterbury undergraduate economics course are higher than the Law Commission's standard for work meant to influence policy. Interesting.

If anyone's particularly keen on seeing the whole thing, I've uploaded it to Scribd, here; I've also blockquoted above the entire response I received from Ms. Corcoran regarding independent review of the report.

The quality of policy advice in New Zealand is abysmal.

Roger Kerr: Alcohol report fatally flawed

Kerr's comment in today's Otago Daily Times (not online as yet, as best I'm aware) is scathing:

A fundamental government requirement for policy decisions on regulation is a competent regulatory impact statement (RIS). The Treasury, now the lead agency on regulation, met the Law Commission on its review and outlined the Government's regulatory analysis requirements. The commission's July 2009 Issues Paper stated that an RIS would indeed be included in the final report.

We now find that the Law Commission and teh Minister of Justice have agreed that this report will not contain such a statement but one will be prepared by the Ministry of Justice for any Bill that the Minister of Justice introduces.

Lacking an RIS, the report fails to establish that its proposals are in the public interest.

Of course, if the RIS had been outsourced to Marsden Jacob, I'm not sure it much would have helped in establishing whether the proposals actually would have been in the public interest. As we saw in the case of the tobacco excise tax increase, even an RIS that Treasury describes as "not commensurate with the significance of the proposals" wouldn't much stop the government from implementing proposals.

ODT readers looking for my critique of the Marsden Jacob report, noted in Roger Kerr's piece, should look here and here.

Kerr makes a few other rather nice points:

• Raising the alcohol purchase age to 20 would align New Zealand with only 11 other countries; 81 others have a minimum of 18 while 12 others, including Belgium, Germany, Norway and Spain, set the age at 16. 17 countries have no drinking age at all.
• "the proposals to ultimately ban all alcohol advertising rely heavily on one anti-alcohol source, and omit its crucial finding that there is a lack of conclusive evidence from the studies of restrictions of alcohol advertising."
• Paraphrasing a great line from economist Edward Stringham, Kerr writes "Raising excise taxes on everyone to curb abuse by a minority would be like raising petrol tax to prevent some motorists from speeding." I love this analogy.

Marsden Jacob review - continued

In the last post, I noted some problems with the Marsden Jacob review. Most annoyingly, from a personal perspective, they strongly critique the Crampton and Burgess work on two points that severely mischaracterise our work. Contra Marsden:

• In actuality, none of our results depend on the cardioprotective effects of alcohol for serious drinkers;
• their critique of our narrow focus highlights a small robustness check at the end of our work rather than the vast bulk of what we actually did - they take the robustness check as constituting the entire method rather than cursory treatment of an alternate method.

They then argue at paragraph 58 that we take a flawed conception of cost internalisation. Because some costs of drinkers' behaviour is borne by others, including friends, families and government, drinkers drink more than they would were they to bear the full costs. We did note the costs to government as a cost of harmful drinking, including costs to the public health system and policing costs. Since they seem to believe that our method discounted all fiscal externalities, presumably they missed that part.

On cost shifting to family and friends, I can't help but wonder whether their argument proves too much: all kinds of consumption decisions we make have effects on friends and family. I may spend too many late nights reading shonky alcohol policy reports and be grumbly the next day; if I had to bear all of the costs thereby imposed on my family, I might do less of that. But, of course, families have ways of internalising those effects: my wife rightly ensures as much. Marsden Jacob here are effectively launching a full assault on notions of consumer sovereignty: if we can't rely on intrafamily mechanisms for solving these problems, then there exists no consumption decision that isn't subject to their critique. This may well be a good argument to have in an economics journal as a critique of existing orthodoxy, but it has no place in a commissioned report that ought to be providing a mainstream economic approach.

This isn't the first time though that Marsden Jacob use their commissioned policy report to challenge the standing orthodoxy though. In their critique of the positive health effects of drinking, they give full weight to a few critiques of the "previously near unanimous orthodoxy" rather than to that orthodoxy. Again, sound technique would have had them accepting the best consensus of the literature in which they are not expert rather than the overblown critiques of a few anti-alcohol folks.

Let's now move on to the rest of the report.

They argue that the deadweight costs of alcohol taxation are 3% or less for a 50% increase in alcohol taxes. Since alcohol demand is fairly inelastic, the Harberger triangle is relatively small. They then invoke the inverse-elasticity rule. But as Seamus noted here and I noted here, the inverse-elasticity rule isn't as simple as the undergraduate version makes out. If supply is not perfectly elastic, then we need also consider reductions in producer surplus, not just consumer surplus. If there are cross-price effects between taxed goods - if inelastically demanded alcohol is a strong complement to elastically demanded restaurant meals, for example, then Ramsey doesn't reduce to inverse-elasticity. And, if taxed goods and leisure have cross-price effects, then we get the Corlett and Hague result. Higher alcohol excise tax doesn't flow automatically from Ramsey considerations. Neither does it necessarily flow from the inverse-elasticity rule: the McLeod report having argued that existing (lower) levels of excise taxation could not be justified on Ramsey grounds.

I'll leave it to Seamus to come in later with more comprehensive discussion of Ramsey taxation.

But, whatever efficiency claims - debatable though they may be - might be made for moving increasing alcohol taxes and reducing marginal income tax rates disappear when those alcohol tax revenues are instead earmarked for anti-alcohol advocacy groups like ALAC. It's consequently disingenuous at best, or blindingly stupid at worst, for Palmer to cite Marsden Jacob's numbers on efficiency gains while simultaneously advocating that some of the raised tax revenue be earmarked for anti-alcohol programmes. To re-iterate: the efficiency claims rely entirely on the consumer surplus that's turned into tax revenue either being rebated to consumers directly or being used to offset other taxes that impose higher deadweight costs. Palmer simply can't pair the efficiency claims with a call for some of those revenues to be earmarked.

Marsden Jacob is entirely correct however that proper Pigovean analysis seeks to equate the private marginal cost of consumption with the social marginal cost of consumption rather than equating total tax revenue with total external cost. To my mind, if total tax revenue roughly approximates total external cost, then things probably aren't far out of whack as a first cut. Their approach in simulation work from page 34 onwards requires that all excise taxes raised are rebated to consumers. Ideally, all collected alcohol tax revenues would be lump-sum rebated to all drinkers. Such a scheme could have pretty desirable characteristics: it effectively would induce progressivity into the alcohol tax schedule. Heavy drinkers would pay net taxes; moderate drinkers would receive net subsidy. The linearity of existing taxes is a pretty big problem: moderate drinkers are overtaxed while heavy drinkers are undertaxed relative to external cost imposed. The tax plus lump sum rebate to every drinker mechanism, noted at paragraph 64, is a pretty neat idea. I'd go so far as to say I could be convinced to endorse it if I believed that all raised revenue would be so rebated and wouldn't just wind up being earmarked for anti-alcohol advocacy. Of course, I'd only endorse it to the extent that the taxes reflected actual external harms rather than things like lost wages that are largely internalised: they're already part of private marginal cost, so putting a Pigovean tax on that part is double counting.

If on the other hand raised revenues just go into the general pool - or, worse, to projects like anti-alcohol advocacy that many drinkers find positively offensive - the MJ results hold only if the consumer derives the same enjoyment from a dollar's worth of tax-paying as he does from a dollar's worth of alcohol. That seems unlikely.

I continue to confess unfamiliarity with the Sheffield simulation approach here used. But I wonder about some of those results. I've not seen any good evidence that young drinkers are more responsive to prices than adults: the price elasticity of demand for young drinkers is not different from that of adults. Grossman, Chaloupka et al, 1998 Economic Inquiry, put it at -0.41: basically the same as for adults. And, we have good evidence that heavy drinkers' consumption is far less elastic than moderate drinkers' consumption. The simulation results show strongest effect of tax on young drinkers; they note at paragraph 95 that Sheffield estimates higher price elasticity for harmful and hazardous drinkers. Both of those make me more than a bit worried about using the Sheffield results.

Honestly, I'm a bit confused here. At paragraph 95 they claim Sheffield finds higher price elasticity for harmful and hazardous drinkers; at paragraph 82, they assume a uniform price elasticity of demand for all drinkers "for consistency with the University of Sheffield study". But, they're at best assuming uniform elasticity; at worst, they're assuming heavy drinkers are more price elastic. Neither one sits well with the best empirical results that heavy drinkers are far less elastic than moderate drinkers.

Everything following in paragraph 96 assumes at best uniform price elasticities for moderate and heavy drinkers; at worst, that heavy drinkers are more price responsive. They also note their results may be sensitive to those assumptions. Writes MJ at paragraph 96.v:

Unless the price elasticities of demand for alcohol for heavy drinkers are substantially lower than for other drinkers, the higher price increases for heavy drinkers means that harmful and excessive (and likely) younger drinkers will face the largest reductions in consumption and therefore the biggest changes in harms to themselves – and to other parties.

Ok. So they have some results that depend on an assumption of at least equal elasticity and that, they admit, are sensitive to whether there are large differences in price elasticity of demand. The best numbers I've seen show youth drinkers' elasticity on par with averages, and heavy drinkers much less elastic (-0.28 vs -0.44). The Law Commission repeats those numbers throughout their report as well, so I'm not going out on a limb in relying on them.

At Paragraph 97, MJ cites the Sheffield results as strongly diminishing the risk highlighted in the Burgess Crampton submission to the Law Commission that "moderate drinkers respond to price increases by more than heavy drinkers." They quote us from our submission, then say:

Indeed, for England and Wales and for Scotland, the policy simulation models suggest exactly the opposite.

I can only laugh and shake my head at this point. In our submission, we were citing evidence that elasticity varies greatly between moderate and heavy drinkers (with heavy drinkers being far less elastic); their evidence against that is a policy simulation that assumes there to be no difference in demand elasticity between moderate and heavy drinkers and possibly assumes heavy drinkers to be more elastic!

And, if they had access to our submission to the Law Commission, they would have seen our extensive discussion there of how our results do not hinge on a narrow conception of rationality. Pages 7-9 discuss that in depth. But MJ simply asserts that our results are sensitive to assumptions about rationality. Again, I'd be happy for them to provide some reasoned argument about how our results were sensitive in a way we hadn't considered. I'd thought yesterday that they'd simply not seen our extensive discussions on the blog and in our submission to the Law Commission on rationality. But they're here citing that submission.

In summary: the only substantive result from the Marsden Jacob commissioned analysis is that an excise tax increase on an inelastic good, if the tax revenue is rebated to drinkers lump sum or offsets more distortionary forms of taxation, may be desirable. Even that result is questionable absent more explicit consideration of cross-price elasticities between alcohol and other consumption goods, and between alcohol and untaxed leisure. Moreover, the McLeod Report specifically rejected alcohol excise tax increases on Ramsey grounds.

Fortunately, Simon Power appears to have entirely rejected alcohol excise tax increases. iPredict's still giving a 16% chance of a 10% or more increase in the excise tax, but no real chance of anything higher.

Marsden Jacob on alcohol

The Law Commission commissioned Aussie consultants Marsden Jacobs to weigh in on the costs and benefits of alcohol. Marsden Jacobs previously issued this report which cited approvingly the Collins and Lapsley measures of the social harm of alcohol (including the amount that drinkers spend on their own booze as a social harm) and which dismissed reduced alcohol consumption in Australia and other countries post liberalisation by noting that, absent liberalisation, the reduction could have been even greater. But I suppose they're a step up from Brian Easton.

Some initial thoughts on the Marsden Jacob (available here and here) report:

• The Marsden Jacobs report fundamentally mischaracterises our approach to rationality, following Easton in arguing that we require strong rationality assumptions. We don't. All we need is that the harms of irrational excess consumption on the latter portion of a harmful drinker's consumption, taken on average across all drinkers categorized as harmful, roughly balance the surplus they enjoy from the earlier portions of their consumption. Heck, MJ's graph at p. 18, figure 7, basically replicates the graph we have at the link above, except representing irrationality as shifting the marginal benefits curve inwards rather than the marginal costs curve outwards. Either one works.
  
  We noted that BERL was too quick to assume irrationality, but nothing we did required strong rationality. If you wanted to restrict the set of harmful drinkers to being only those for whom the total costs of consumption are higher than the total benefits, that would be different. But when the range of harmful drinkers is set so broadly as to include folks who occasionally have three or more pints, we really have to take seriously the consumption benefits that these folks get.
• MJ then go on to conflate economically irrational consumption with epidemiologically harmful consumption. This is a serious error on their part. It's not crazy to count internalities where there are demonstrated irrationality issues. I don't like it much, and I'd argue against it, but it's not crazy. But taking consumption beyond an epidemiological threshold as prima facie evidence of irrationality is crazy. They move directly from the non-crazy "if people are irrational, they may well consume in excess of where they'd consume if they were rational; if irrational, some apparent consumer surplus needs adjusting downwards" to this:

  The above discussion highlights that, to assess the impact of policy measures, such as an increase in the rate of excise, it is important to know the proportion of total alcohol consumption that can be considered to involve high lifetime or high short-term risk. This is especially important when exploring and quantifying the implications of value judgements that allow for irrationality in consumption decisions on alcohol when intoxicated or over the longer term.

  For MJ, consumption beyond an epidemiological norm is irrational. Interesting value judgement. I wonder whether Palmer had a good idea about their particular values when he hired them.
• MJ seriously and uncharitably misreads our report at paragraphs 55 & 56. At page 31 of our report, we noted that our measure of external costs also included some external costs that would be taken as pecuniary rather than technological were we to take the Buchanan and Stubblebine approach to delineating the two. All of our numbers provided the figure that included matters Buchanan and Stubblebine would have taken as being pecuniary, like costs to the public health system. We noted that revising things to remove all pecuniary externalities, both positive and negative, would have had little effect on overall results because we'd also then be knocking out tax revenues as being only a transfer. Net costs would be little changed.
  
  MJ then characterizes us as arguing strongly in favour of the lower "technological externalities only" position and only begrudgingly conceding the possibility that others might consider also the fiscal externalities that Buchanan and Stubblebine labeled pecuniary; they say this is out of line with Treasury and the Business Roundtable's prior work.

  Thus, Crampton and Burgess exclude from consideration lost output, alcohol production costs, costs of crime prevention, health care costs, most road crash costs and excise taxes collected.

  This is a serious mischaracterization of our work. At Table 2, we tallied costs of lost output due to harmful alcohol use: $173 million less consumption resources saved of $299.7 million. We did indeed deem alcohol production costs to be fully internalized: people do buy their own alcohol without subsidy. Costs of crime preventative expenditure we tallied as $24.7 million at Table 3. Section 4.5 lists external health care costs of $254.8 million. We did discount most road crash costs to include only the costs on innocent bystanders: $33.2 million. Finally, we counted collected excise taxes against the total measure of external cost. It's only in the one-paragraph: "Oh, if you want to follow Buchanan and Stubblebine instead, it won't make much difference" that we wipe all of those costs and benefits aside.
  
  It's not like we made a big secret about this; it's all laid out very plainly in the report, we released a spreadsheet with all supporting calculations, and I've blogged extensively on it. Marsden Jacob and Associates either is incompetent at basic reading comprehension, or deliberately promulgates lies. It would have taken considerably less than a month for us to fisk the BERL report had we been able to dismiss all of those costs out of hand. Rather, we adjusted them so they made some kind of sense, then gave our best guess at the portion that fell externally.
• MJ's treatment of cost internalisation at paragraph 58 is interesting. They say our approach is flawed for assuming that drinkers internalize costs; they say rather that costs are imposed on family, friends and others.

  They do not bear the full costs because friends, families, partners and governments act to offset these costs. A rational fully informed drinker would recognise and anticipate this support when making his consumption decisions. If the subsidy from the welfare system and/or from the support of other individuals were removed, the individual would make different choices. This is a form of moral hazard since drinkers (even if perfectly informed of the costs and risks) know that they will not bear the full costs. The individual drinker does not count the cost of these subsidies since they are a benefit to him, but they are a cost elsewhere.

  Is there any consumption - cars, movies, anything at all - for which this would not be true? Do we say that the cost of McDonald's food is not internalized because people on welfare would buy less McDonald's food if they didn't get welfare payments? Do we reckon that Corvettes are horrible things because men in their late 40s buy them and impose those costs on their families? This is ludicrous.
• Next in the list of items headed Marsden Jacob and Associates either is incompetent at basic reading comprehension, or deliberately promulgates lies: paragraph 59, where they claim that our results rely too strongly on assumptions of strong cardioprotective effects of alcohol. Again, this either is a deliberate lie or they're incompetent. Here's what we did say in our report:

  As noted earlier, Corrao et al (2000) provide reasonable evidence of health benefits of alcohol consumption extending well beyond the hazardous threshold used by BERL; no health benefits are counted by BERL. Net health care costs of “harmful” alcohol use will consequently be rather lower than those cited by BERL. However, putting a value on this would require serious research beyond what we here are able to do.

  We specifically said that we think the health costs are an upper bound because of the beneficial effects of alcohol for cardioprotection even on heavy drinkers (note that the benefits for moderate drinkers are left to one side as well): we do not tally them ever in our figures. Nothing in our results rely on strong or even ANY cardioprotective effects at high consumption levels. MJ is starting more and more to look like a deliberate hit piece rather than a serious piece of analysis.
  
  In Box 3, they go on to argue against the health benefits of moderate drinking, which was entirely beside the point for tabulating costs and benefits of heavy drinking. But, they raise every canard that I blew up here. It's hopeless. It seems as though there's a result that they were paid to find, and they were sure to find it. It does discredit to the Law Commission that they commissioned and endorsed this work.
• Finally, they chide us for ignoring the work of the Sheffield team in cost simulation. I will happily confess to ignorance about that work. We were fisking a particular report on the costs of alcohol. If we'd been paid anywhere in the range that BERL were paid, or Marsden Jacob (oh, I'll look forward to getting that price by OIA), we might well have canvassed a bit more broadly.
• Marsden Jacobs argue that tax increases on alcohol can be efficient: they argue that while it's true that moderate drinkers are more price responsive, the Harberger Triangle is small relative to the tax take, and the tax take is better than just a transfer, it's an opportunity to offset less efficient taxes. Seamus previously warned us of the problems in taking an undergraduate understanding of Ramsey taxation to policy: it isn't absolute price elasticity that matters so much as cross-price elasticity with untaxed leisure. In any case, the Law Commission goes on to undermine whatever efficiency case there might be by arguing that at least some of the excise tax take should be earmarked for alcohol harm reduction. Treasury explicitly reminds LC of this in their note preceding the Marsden Jacobs report.
• MJ seriously downplay the health benefits of moderate drinking and make no attempt to estimate the reduction in those benefits with an increase in excise tax

Skimming ahead (haven't read the last third in any depth as yet), I see calls for scenario modelling of results where half to 80% of alcohol is irrationally consumed; I also see them arguing that the existence of alcohol advertising proves that consumer preferences are too malleable to be the basis for welfare:

the integrity of the concept [consumer surplus] can be questioned for several reasons including that the New Zealand alcohol industry believes it is profitable to spend substantially (more than $30 million a year) on alcohol advertising and promotions to shift consumer preferences;

Wow. Advertising means that consumer surplus is all wrong. Just wow. I need a drink.

Palmer report - initial thoughts

A couple of initial thoughts on the newly released Palmer report.

• They apparently worry that while alcohol price increases have exceeded the CPI, price increases haven't kept up with wages. So alcohol has become more affordable relative to incomes. It's, of course, by definition less affordable relative to the other elements of the consumption basket if alcohol price increases have exceeded CPI. But measuring it against income increases lets them worry about the growing problem of alcohol affordability. (see section 17.5 onwards). Now, if alcohol is more income elastic than other goods, alcohol consumption could rise relative to other goods despite the relative price effect. But then we'd expect stronger movement in the aggregate consumption statistics, which remain pretty flat. And, we'd expect a lot of worries in the report about rich people are disproportionately represented in the harmful drinking stats.
• They've fixed the nonsense of their prior view that heavy drinkers are as price responsive as moderate drinkers. That's good.
• But, they worry a lot about harmful drinking instances by moderate drinkers. Recall, of course, that their threshold for a harmful drinking session is six standard drinks for a male: under three pints of 5% beer. It's no surprise that they find that a quarter of drinkers report meeting this rather low threshold. Sure, it's into the range where we start seeing increased mortality risk, but not crazy far into that range. If minimizing mortality risk is desiridatum, we all ought have a mandatory glass of wine per day.

I'm currently working through the Marsden Jacob report commissioned by LC on the economic costs of alcohol. Wishing I had a beer here ... egads.

NBR on Palmer Report

Friday's National Business Review on the forthcoming Palmer Report:

Puritanical nonsense

As is usually the case with Sir Geoffrey Wowser, these recommendations combine a love for finger-wagging nanny state with a desire to tax “undesirable” behaviours out of existence.

How fair is it to ban 18 and 19 year-olds, who can legally vote, drive cars and get married, from buying some beers?

The anti-alcohol zealots keep using the “cost of alcohol to society” to justify their assaults on freedom.

But the only reason alcohol costs “society” and in particular the taxpayer so much is because New Zealand has decided to privatise the benefits of alcohol while socialising the costs through ACC and the public health system, which is clogged up by drunken idiots with stupidity-related injuries and who refuse to be treated.

Here’s a novel idea – if people injure themselves or damage property or other people while in a drunken stupor, make them liable for the cost of the damages.

Bankrupt those who can’t pay. Maybe then these incoherent inebriates won’t be able to afford any more nights out on the town on the taxpayer tab.

I'd disagree slightly.  As Matt and I showed last year, the costs to "society" only tally up to really sizeable figures if you're happy to include a raft of private costs as social.  Under normal economic method, external costs roughly match the tax take.  So drinkers are already, on average, paying their way through the health system; moderate drinkers are heavily subsidizing the right tail of the distribution, but that's always going to be the case with a linear per unit tax that can't vary tax levels with the amount consumed. The sad bit is that an alcohol tax increase will do more to punish moderate drinkers than to curtail the problem end of the distribution given relative demand elasticities.

NBR is right that putting more focus on punishing the activities that generate negative externalities is likely to be more helpful than putting a tax on an activity that correlates only weakly with generating negative externalities.

I'll look forward to reading the report....

Alcohol - let's review

TVHE reminds us of a few things we ought remember in alcohol policy.

I'll summarize and add a few more.

First, LC reportedly recommends increasing the alcohol excise tax by 50%. Recall that the price elasticity of demand for heavy drinkers is -0.28; for moderate drinkers, -0.44. That means that if the price of a unit of alcohol goes up ten percent, moderate drinkers buy 4.4% less alcohol while heavy drinkers by 2.8% less. Moderate drinkers enjoy consuming alcohol, both because it's inherently enjoyable, and because there are health benefits. Heavy drinkers also enjoy consuming alcohol, but let's grant the healthists' premise that they drink more than they would were they fully rational and fully informed.

Now, without some tedious digging into national income accounts, I can't put precise numbers on it. But let's ball-park things. A half-litre of 5% beer has $0.63 in tax; low end beer sells for about $1.90 for a half-litre. So the tax currently is about a third of the price of low end beer. If the tax rises from 0.63 to $0.94 and there's full pass-through, tax rises to 42% of the price of beer, now priced at $2.21 per half-litre. The price of beer then rises by about 16%. At stated elasticities, moderate drinkers reduce their beer consumption by 7%; heavy drinkers, by 4.6%. If there were one harmful drinker for every moderate drinker, and if we normalize the costs to the moderate drinker of lost consumer surplus to 1, then the heavy drinker needs to enjoy benefits of at least 1.5 for the policy to pass cost benefit. If there are two moderate drinkers for every harmful drinker, the ratio rises to 3.

Recall further that the benefits to heavy drinkers from reducing consumption, even granting the assumption that they're irrational or ill informed, is only the area below the marginal cost curve and above the marginal benefit curve for the portion of consumption that's forgone with the tax increase.

An increase in the excise tax will reduce consumption. But, it will reduce consumption by more among moderate drinkers than among heavy drinkers, and will almost certainly fail cost-benefit analysis.

Second, recall that the estimates of the costs of harmful alcohol use are grossly overstated. The estimates use a method designed to inflate the costs of harmful use by counting all private costs as social costs, by attributing to alcohol all of the costs involved in activities to which alcohol was only inframarginal rather than decisive, by assuming that heavy drinkers enjoy zero benefits by their consumption, and by assuming that an alcohol-induced absent or unemployed worker can never be replaced by another worker. It's complete nonsense. A rough, but methodologically sound, accounting puts the external costs of alcohol consumption slightly below the tax revenue. Anybody wanting to cite BERL's shonky old number on the costs of harmful alcohol use would do well to re-read our critique, their reply, and our rejoinder.

If the government wants to tighten up alcohol regulation, I hope that they'll use an honest paternalistic argument rather than a dubious economic one.

Farrar in the NBR (ungated) faults the Law Commissioner:

The crusading was not restricted to New Zealand. Sir Geoffrey even went to Australia, and spoke at an Australian Drug Foundation conference. Not the Minister., ot the Director-General of Health, but the Law Commission President. The 68 year old Sir Geoffrey decried the fact that people put photos from parties up on Facebook. He wants an end to people getting drunk – an endeavour that would be as likely to succeed as prohibition succeeded in the 1930s.

I've only talked once with Sir Geoffrey. He didn't come across as a teetotaller wanting to eliminate everyone's fun but rather as placing very high weight on the costs imposed by a tiny minority of drinkers and next to no weight on the benefits of moderate drinking to moderate drinkers; consequently, reduced consumer surplus among moderate drinkers doesn't enter his social welfare function with the same weight as reduced harms from the few bad guys. I worry that his overestimating of the harms and discounting of the benefits leads him to advocate welfare-reducing policies. I hope Parliament is sensible enough to weight his recommendations appropriately.

Not a good day [updated]

And the second bit of angry for the day: Kiwiblog reports on some leaks from the forthcoming Palmer report on alcohol.

I understand the Palmer Report proposes:

1. A massive 50% increase in the excise tax on alcohol. This would result in an extra $500 million of revenue to the Crown at the expense of everyone who drinks.

2. Banning the sale of liquor at off licenses after 10 pm. So if you pop into New World at 10.30 pm to do your shopping (which I often do), you won’t be able to buy a bottle of wine.

3. Forcing bars and nightclubs to refuse to allow people to enter after 2 am.

4. A nationwide closing time for all outlets, probably at 4 am.

5. An increase in the purchase age for alcohol from 18 to 20, criminalising 130,000 18 and 19 year olds if they buy alcohol.

Will Sue kill me if I bring the LC report into the delivery room next week? Is there wifi at Christchurch Women's? At least then we can both be doing the "scream in pain" thing, at least until her epidural kicks in. After that, it'll just be me...

Update: Simon Power sounds lukewarm to the proposals; by contrast, he was outright hostile to the suggestion that the Law Commission might consider recommending loosening up the rules around marijuana use. Paraphrasing, then it was "no way, not on my watch"; here, it's "well, that's what LC thinks and we still need to decide what to do."

Misuse of Drugs Act Panel Discussion

Yesterday's panel discussion with Law Commissioner Warren Young and Professors Newbold and Young was fun. The 40-odd audience seemed broadly supportive of ending the war on drugs.

I was left with the impression of a Law Commission tightly hemmed in by what it views as our international obligations and the political constraints of a socially conservative and status-quo biased current administration.

I'd take an alternative view in the Law Commission's place. Given that National is completely unlikely to do anything that might possibly be viewed as relaxing any of our current laws, the final Law Commission report should stop worrying about the political constraint. Instead, it should issue a two-part report.

The first part would deal with housekeeping matters surrounding the current legislation: anomalies in the rank-order scheduling of different substances that have Ecstasy treated far too harshly relative to other substances; allowing doctors to prescribe marijuana for medical purposes and implementing a regulatory structure to prevent leakage from the medical market to the recreational market. As we currently allow doctors to prescribe otherwise proscribed opioids, there's no particular reason marijuana couldn't be brought under the same kind of regulation.

The second part wouldn't be written for the current National government but rather for longer term change: it should be addressed to the intelligent public and serve as the basis for the next decade's arguments over the effectiveness of prohibition relative to other regimes. It should deal seriously with the costs of prohibition, the extent to which the harms associated with drugs are due to prohibition, and alternative structures that would do more to minimize overall harms. It might even move beyond harm minimization to consider welfare maximization, which would weigh the benefits of consumption for those who do enjoy such consumption.

It could even go further to discuss some ways that legalization might be effected despite our international obligations. While we may be constrained to keeping certain substances illegal, nothing in the international agreements specifies the level of resources that must be devoted to the war on drugs (or, at least that was Professor Young's understanding).

So a future, more sensible, government could, for example, have a conversation with the New Zealand Police encouraging different districts to try innovative policing measures to reduce property and violent crime rates; drug interdiction efforts would not be a key performance indicator. If drug interdiction is helpful in reducing violent and property crime, then leave the districts to try it, but if other districts are able better to reduce property and violent crime rates by redirecting resources from drug busts to other policing, or even by trying something like Hamsterdam, well, that would be something that might well wind up being recommended as best practice sometime down the line. They could even go so far as to promise to help districts wanting to go that route by providing public health and treatment services in those areas for those who need it. Drug use would remain illegal, but not an enforcement priority. No more pats on the head for Staff Sergeants announcing their latest marijuana busts; instead, they'd be asked to show how the bust has affected the crime rates the government cares about.

There is no point in trying to convince the current government of anything on this front. John Key wouldn't change his tie if he thought it might hurt him in the polls, nevermind liberalize our drug laws. The argument instead has to be addressed to the voters and to the chattering classes that help to shape public opinion. Lay out the evidence - there's lots of it - then put it in the kinds of stories folks can easily understand.

If we only get reviews like this every 35 years or so, it would be an utter waste to have the review spend all its time addressing an audience with its fingers plugged firmly in its ears. If there were a chance of compromise with an unfriendly but reasonable government, then there'd be good argument for a document that pulled its punches in hopes of achieving some change now. But the current government isn't reasonable. The Law Commission should instead be addressing the government we might have in ten years time, and the voters who might help to take us there.

Misuse of Drugs Act

For those interested, I'll be participating in a panel discussion on the Misuse of Drugs Act this afternoon. Hope to see some of you there!

Panel Discussion on review of the Misuse of Drugs Act. Law Commissioner Dr Warren Young with Professor Neil Boister (Law), Professor Greg Newbold (Soci) and Dr Eric Crampton (Econ) discuss the recently released Law Commission discussion document on the Act. Chaired by David Round (Law).

Date: Thursday 25 March
Time: 3:00pm
Location: C3 Central Lecture Block, University of Canterbury

All Welcome

Background

In February this year, the Law Commission released a 400 page discussion document reviewing the 1975 Misuse of Drugs Act. The Commission is inviting submissions on this document (until the end of April).

Law Commissioner Warren Young will present a brief summary of the review, to be followed by a panel discussion. The panellists from disciplines of Law, Sociology and Economics have all made scholarly contributions in the area of drug policy.
All welcome:

Those interested can download the
36 page summary of the Issues paper from
http://www.lawcom.govt.nz/UploadFiles/Publications/Publication_143_455_Part_1_IP%2016%20Summary%20-%20Controlling%20and%20Regulating%20Drugs.pdf

or the full 408 page Issues Paper from
http://www.lawcom.govt.nz/UploadFiles/Publications/Publication_143_455_IP16%20-%20Controlling%20and%20Regulating%20Drugs.pdf

Law Commission on Drugs

Will DeCleene is blogging his way through the Law Commission's report on drug policy. He's finished the Intro, Chapter 1 and Chapter 2; future chapters will likely be found at this tag. An early highlight:

But if John Key can perform backward somersaults over GST rises, he can damned well change his mind on drug reform too. Facts change, eh. And the Law Commission paper is full of facts.

F'instance, did you know that the first drug law in NZ one hundred years ago was very thinly-disguised racism? Or that although current laws allow cultivation and research licences of these restricted drugs, there are only 21 research licences in NZ at present, and no cultivation licence has ever been issued? Or that the law allows a Minister of Health to withdraw a person's prescribed medication without their doctor's agreement or even directly contradicting the doctor's advice?

On my quick skim of this and my rather more thorough read of the earlier alcohol report, it feels like LC really wants much tighter restrictions on alcohol and loosening up on marijuana such that, ex post, marijuana is no more tightly regulated than alcohol. But they pull their punches sufficiently on the drugs report that it's more likely that the gap between alcohol and marijuana is closed by increased restrictions on the former than by any easing of restrictions on the latter.

Alcohol submission

Matt Burgess sent off our joint submission to the Law Commission on Friday. It's available here. Highlights:

• The best available evidence shows heavy drinkers respond less to price increases than do moderate drinkers; the costs on moderate drinkers of excise tax increases are therefore much higher than the Law Commission previously believed given their assertion that heavy drinkers respond more to price increases than moderate drinkers.


• Public health measures of social costs bear no resemblance to economic measures of social costs and should be treated with skepticism.


• Economists' recommendation to focus on external costs does not depend on strong rationality assumptions.


• Alcohol and other intoxicants are substitutes; raising the price of one may induce substitution towards others. DiNardo and Lemieux find the US drinking age increase to 21 resulted in an increase in marijuana prevalence more than half the magnitude of the decrease in alcohol prevalence.


• Individuals seem to overestimate the risks of becoming alcoholics, and youths especially overestimate this risk. Worries about "imperfect information" causing too much consumption are overblown. See Lundborg and Lindgren 2002.


• Rashad and Kaestner 2004 provide some apposite warnings of drawing causal relationships from correlations between youth drinking and adverse youth outcomes; underlying variables may cause both.


• The Law Commission should weigh more heavily the costs their proposed policies may impose on moderate and sensible drinkers.

What crisis?

Lindsay Mitchell points to the newly released 2009 Social Report for New Zealand. On "potentially hazardous drinking", the Social Report notes that potentially hazardous drinking among 15-24 year olds in 1996/1997 was 40.8%; in 2006/2007, it's 41.1%.

Clearly this is such a horrible rising trend that we have to increase the drinking age to 20, where it was in 1996 before all our teens starting heading out on alcohol-fueled rampages. A recent survey showed three quarters of Kiwis believe lowering the drinking age has had a negative effect, which is clearly revealed in this shocking new data of 0.74% increase in the rate of harmful drinking.

Even worse, this massive and unprecedented increase in the rate of harmful drinking was concentrated among the most socially marginalized and disadvantaged group, European/Other, which saw an increase of 6.9%; by contrast, the Maori and Pacific Peoples groups saw decreases of 2% and 1%, respectively.

Geoff Palmer is right. It's time to increase the drinking age to 25 and brand drinkers with the sign of the A for Alcohol. Statistics don't lie, and these ones more than justify anything the Law Commission might wish to recommend.

Further on the price elasticity of demand for alcohol

The Law Commission's report claims that youth are particularly price sensitive and that heavy drinkers are no less price sensitive than moderate drinkers. As noted a couple of days ago, the latter claim is absolute nonsense. Price elasticity of demand among heavy drinkers about roughly half of that of the average. However, that average includes heavy drinkers, so it probably understates the true difference between moderate and heavy drinkers.

What though of the claims of heightened youth price elasticity? It's plausible: alcohol is also income elastic, and youth are poorer, so what you could find a higher elasticity working through that mechanism. LC cites a book by Babor which isn't available in the Canterbury library. I'll put it on interloan request, but in the meantime have gone searching for any numbers on the elasticity of youth consumption. Google Scholar has only thus far provided one estimate. Grossman, Chaloupka, et al, 1998, Economic Inquiry. They find that youth short term price elasticity of demand for alcohol is -0.41. Identical to the average found in the meta-study cited in the previous post.

Given how the LC utterly misread the literature on relative elasticities of heavy and moderate drinkers, I'm not inclined to give them the benefit of the doubt while waiting for the book on interloan. We will see what shows up in the interloans pile in a week or two.

And further on price elasticity

Seamus reminds us that we need to look at relative elasticities.

Brian Easton provides advice that the Law Commission deems "helpful". His advice is:

It is generally assumed that the demand for alcohol is largely price inelastic. However, it is believed that the main groups whose consumption is sensitive to changes in price are:

• the young;
• binge drinkers; and
• heavy drinkers.

Easton is right that alcohol consumption is relatively inelastic: around -0.44 for beer, which means that a 10% increase in price reduces consumption by 4.4%. But we tend to expect that the folks whose consumption produces greatest harms would also be the folks whose consumption is relatively least elastic. Price elasticity basically tells us how many substitute commodities there are out there for the consumer. If the individual views there as being no substitute for alcohol, his price elasticity will be very low; if he views a Coke as being a not too bad alternative, his price elasticity will be rather high. And, indeed, what numbers I've seen on it show that heavy drinkers are less price elastic than are moderate drinkers.

If we decide to be charitable, then Easton's just reminding us that even heavy drinkers are price sensitive. Which is true. But they're less price sensitive than moderate drinkers. Even if you accept the premise that there are some heavy drinkers who could be made happier by virtue of a tax increase that helps to keep them on the straight and narrow, moderate drinkers' consumption is more strongly affected. Suppose we have a 10% price increase. Moderate drinkers reduce their consumption by about 4.4%; heavy drinkers reduce their consumption by about 2.8%.

Now, how much does a heavy drinker benefit from a 2.8% reduction in consumption? How much is a moderate drinker harmed by a 4.4% reduction? And what are the relative proportions of both in the country? BERL said that 1/6 are "harmful" drinkers, which I still think is a gross overestimate of the true proportion. But let's take it for now. It then has to be the case that a single heavy drinker reducing his consumption by 2.8% is benefited by at least six times as much as a moderate drinker is harmed by a 4.4% reduction in his harmless drinking for the tax increase to potentially be efficiency-enhancing. If the true proportion is 1/10, change it to 10 times. Recall that for the wowsers, consumption of 2 pints per day is harmful; the midpoint of BERL's "high risk" category is 110 grams: 11 standard drinks, or about 5 pints. How big a price increase would be necessary to get the high tail consumers down to "moderate" levels? Well, they'd need to reduce their consumption by about 65%. If your price elasticity of demand is -0.28, then you need a 232% increase in price to reduce consumption by 65%. And of course for that level of a price increase, the moderate drinkers reduce their consumption pretty much to zero. All of these numbers are just back of the envelope, for now. But I don't think they're far out.

The LC cites a WHO study arguing that heavy drinkers are no less elastic than other drinkers. A quick check shows the WHO is looking at 2-3 studies while the above-linked one is a meta-study of more than a hundred, with results that are near identical to another meta-study of similar magnitude. The latter, forthcoming in the Journal of Economic Surveys, doesn't give a breakdown between heavy and light drinkers, but has near identical estimates of average elasticity. I give a heck of a lot more weight to a serious meta-study, and especially when two of them give near-identical results, then to a couple of pieces picked from the potential list. If there are more than a hundred studies, you can always find a few that give you numbers you like.

Looking more closely at the Law Commission's preferred WHO finding, ... wow. Terrible work.

While heavy drinkers are sometimes thought to be likely to be less affected by price, the Committee found that the evidence does not support this belief, with higher prices affecting the amounts consumed by frequent and heavy drinkers. This finding is supported by a large body of evidence which has shown an impact of prices on harms caused by alcohol, also indicating therefore that heavier drinking has been reduced (34). Natural experiments that have occurred recently in Europe as part of changes required as consequences of economic treaties have shown that as alcohol taxes and prices have been lowered, so sales and alcohol consumption have increased (37). In some jurisdictions in Europe, special taxes have been introduced for spirit-based sweet premixed drinks, in response to increases in young people’s drinking (38). These have led to reductions in sales and consumption of the specific drinks.

Nothing in the paragraph supports the WHO's argument. Nothing. Demand curves slope downwards, that's all they're saying. All groups are somewhat elastic in that demand drops when price increases. The question at hand is whether moderate drinkers reduce their consumption by more than do heavy drinkers, and they provide zero evidence supporting their opening claim. I cannot see how the Law Commission dismissed the findings of the meta-study based on this paragraph.

Shocking.