Thursday, 27 June 2013

Pigovian taxes and minimum pricing

By Barrie M. Craven, Michael L. Marlow and Alden F. Shiers

Excessive alcohol consumption is associated with many deleterious effects on individual health.  Its negative impact on wider society includes crime (including domestic violence), drunk driving, sexual assault, unnecessary hospital admissions, excessive demands on policing, and workplace absenteeism. The coalition’s policy on tackling alcohol abuse includes banning below-cost alcohol, removing problem-causing licensees, raising the cost of late-night licences, and doubling fines for selling to under-age consumers.

In a new article in Economic Affairs, we examine the argument that setting minimum prices for alcohol improves public health and decreases public health care costs. Our analysis focuses on binge drinking observed on weekends, when large numbers of young people drink heavily in cities and towns. Binge drinking is defined as men consuming more than eight units of alcohol and women more than six units in a day. Excessive alcohol consumption in the home, some of which may qualify as binge drinking as defined, is addressed as our second concern.

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