Friday 17 July 2009

More NBR on the Hurly-BERLy

Today's print edition of the National Business Review covers the latest iterations of the debate between Matt and I on the one side and BERL on the other. Unfortunately, the story's not online; perhaps it'll be available as subscriber-only online content eventually to protect it from parasitic bloggers who do no independent investigative work.

A few choice excerpts:
The lead author of the controversial Business and Economic Research Ltd (Berl) report on the social costs of alcohol, Adrian Slack, and economists Dr Eric Crampton and Matthew Burgess have squared off in a bare-knuckle brawl of the theorists to gtry to prove whether alcohol costs New Zealand $4.8 billion or $662 million -- and the price of your favourite tipple may depend on who's right.
Mr Slack is standing firmly by all Berl's figures and has dismissed any criticisms of its report.

For starters, Mr Slack has reiterated that Berl was not commissioned to look at the benefits as well as costs of alcohol, which is why Berl has produced a figure that reflects the gross rather than net costs of alcohol to society.

But Dr Crampton and Mr Burgess contend Berl does consider benefits and that it is actually integral to its headline costs because private costs can only be counted as social costs if there are no offsetting private benefits.
So only the net social costs of alcoholic consumption were relevant for policy-making, which Berl chief economist Dr Ganesh Nana later conceded in a discussion with Jim Mora on National Radio.
The article goes on to list some of the points left to one side by BERL in its rebuttal.

Lion Nathan corporate affairs director Liz Read notes in the article that, as excise tax is paid by producers, it isn't necessarily passed through into retail prices so tax increases may not influence consumption. I think we have reasonable evidence in the literature of strong pass through, as we'd expect for goods that are relatively inelastic in demand. Tax incidence tells us that the producer bears the larger burden of a tax where demand is elastic but that the consumer bears it where demand is inelastic. The problem rather is that "harmful drinkers" are less price elastic, and so the burden falls disproportionately on moderate drinkers.


  1. Hang on a second. Mr Slack? (Yes, I am slow on the uptake.)

    So I was taught first year economics by a man who not only didn't have a PhD yet, but also didn't go on to get one in the ensuing five years?

    I was under the impression that he was finishing it off at the time that I was in his class, but obviously this wasn't the case.

  2. Dissertations can take time, especially if you're working on it part time while working in the private sector.

    My PhD took 5 years; of course, that was in the US where you do about 2.5 - 3 years of course work before starting your thesis. It would have taken me a lot longer if I were trying to do it while working in the private sector as a day job.