The rhetoric of restricting the choice of the poor

Via Gareth Morgan on twitter I spotted the following post from the University of Otago Public Health blog.

The money quote:

They found that the biggest impact of a minimum price policy was on “harmful” drinkers in the lowest income quintile (7.6% reduction in alcohol), whereas the impact on harmful drinkers in the highest income quintile was modest (1%). Consumption fell by 1.6% among “responsible” drinkers in the lowest income quintile. That is, the impact is concentrated among low-income harmful drinkers.

Moreover, this Lancet paper found that “Individuals in the lowest socioeconomic group (living in routine or manual worker households and comprising 41·7% of the sample population) would accrue 81·8% of reductions in premature deaths and 87·1% of gains in terms of quality-adjusted life-years.” In the public health field, we seldom see policy packages that have such a notable impact on reducing health inequalities. [** Further comment at end].

The gains come from putting a minimum price of alcohol that prices the poor out from consumption.  Consumption that has a benefit – something that is ignored constantly.

Talk about evidence all you want (a lot hopefully – as evidence is central, and I respect the PHB for bringing empirical research up so constantly), but if your ethical framework places zero benefit on consumption choices of the poor your policy conclusion will be restricting the choice of those in poverty – always.

Given I expect some random comment like “you are assuming perfectly rational choice” from people, I’ll cover that upfront.  No I’m not, not even close.  I’m asking us to actually allow for the fact some benefit may exist – rather than setting it to zero.  And that those who are poor actually have the right to some agency.  It is the assumptions of those who want to restrict choices that are extreme, and that should be due to more scrutiny.

If we want to help those most in need, surely our focus needs to be on opportunity, capability, and treatment – not on taking away their choices.  A minimum price of alcohol works by “pricing out” the poor, limiting their choice set, and thereby removing choice.

This isn’t nit-picking, it is a central point about policy relevance – totally and completely central.

Update: Eric Crampton notes a bunch of posts regarding the issue in this tweet:

Update 2:  I was a bit late reading NZ econ blogs this week, and only just came across this from Eric at Offsetting – it is very good, and very relevant.  I am fundamentally and centrally concerned with how economics language is being used to link descriptive analysis and policy in a lot of modern literature – in a way that involves strong, and obfuscated, moral judgements.

  • http://offsettingbehaviour.blogspot.com/ Eric Crampton

    In fairness the MoJ report does weigh lost consumer surplus. But their elasticity estimates are way out of whack, they know the elasticity estimates are wrong, but they proceed anyway. If you assume heavy and light drinkers are equally price sensitive, instead of heavy drinkers’ being only about half as responsive, the cost benefit assessment goes badly wrong.

    • http://tvhe.co.nz/ Matt Nolan

      Yes.

      I was criticising the rhetoric of the post here – which was to concentrate on benefits from the reduction in consumption.

      • http://offsettingbehaviour.blogspot.com/ Eric Crampton

        Yeah, they’re pretty dismissive of that consumers might enjoy such things.

  • Paul M

    Agree 100% benefit always gets ignored and it makes me angry too.

    Re this issue in general. I think that there are two types of problem drinking: (1) binge drinking (excessive drinking once or twice a week) and (2) traditional alcoholism (drinking every night).

    Policy in NZ reduces (2) but increases (1).

    When you increase the price of alcohol it makes it more difficult to drink every night.

    However it is still possible to drink excessively every Saturday. In fact, the more expensive alcohol is the more people binge drink. It is to do with wanting to drink in ‘town’ but only being able to afford to drink at home. To get around this people drink excessively at home and then go to town. I dont believe people get super excessively drunk on purpose, this is a by-product of getting ‘pre-loading’ but getting it wrong. That last shot of vodka before town, intended to save $10, but actually being one that wasnt actually needed.

    If I was setting policy I would take similar measures to status quo on alcohol bought for home consumption, but attempt to make measures to make alcohol bought ‘in town’ closer in price. For example, currently a beer costs approx $2 per bottle at super market at $8 bottle in night club. If this was $2 and $4 the incentive to drink at home rather than at night club would be less. People would then drink as they need it rather than in preparation, and the risk of getting it wrong would cost less.

    This also has the benefit of helping bars take responsibility as people will be in bars rather than sneaking a last woody out of the boot of a car. Thoughts?

    • http://tvhe.co.nz/ Matt Nolan

      Hi Paul,

      The key thing for me is trying to identify the externality – and trying to understand the nature of the individual action involved.

      The hard thing with “problem drinking”, “problem smoking”, “problem drug taking” is that often the externality we observe is either:

      1) A cost on the individual (or a related internal unit – eg the family), not an actual externality

      2) A result of OTHER CHARACTERISTICS of the individual – eg the drinking/smoking/drug taking is a symptom not a cause of the actions.

      In such a case, I fail to see how a tax instrument provides a very good tool for what is likely to be a mental health issue. I try to flesh out this idea a bit here:

      http://www.tvhe.co.nz/2014/02/04/policy-and-heterogeneity-a-point/

      My biggest concern is that policy is starting to be based on what the “ideal” individual should be – and if people differ it is a “cost” to “society”. This is not right, and it seems that it is my own discipline that is most determined to push this type of idea :|

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