Costs of minimum alcohol pricing would outweigh benefits

Appreciation of the scientific method and the economic way of thinking

The article seems to assume that a statutory minimum price on a unit of alcohol is self evidently desirable and that, by implication, those who oppose it do so only out of sinister intentions guided by vested interests. This leads Gornall to look for financial relationships that often do not exist but are implied by association, rather than to accept the more obvious explanation that many people sincerely disagree with the policy on grounds that are evidence based. His feature makes no attempt whatsoever to engage in the scientific or economic debate but merely tries to undermine the process of pursuing knowledge in a scholarly fashion by disparaging the reputations of those on the other side of the debate. As such, it is worth restating the case that is made by the opponents of minimum pricing, arguments that have simply not been answered by the proponents.

Firstly, the idea that, all other things being equal, higher prices tend to lead to lower consumption is not such a novel insight in economics as it seems to be in public health. It is not an observation that would lead to the publication of scholarly arguments in an economics journal. However, the precise effect of minimum pricing will depend on behaviour, and the effect found in any model will be determined by the way the model is constructed. If social scientists tell a computer that a minimum price will reduce licit alcohol consumption and that, more controversially, this reduction will lead to better health outcomes, it is self evident that the computer will reflect this in its estimates of “lives saved.” Moreover, the number of lives saved will rise as the price rises. To those who lobby for a minimum price this is sufficient information to make the policy “evidence based.”

But the evidence is partial, because the models are partial. They disregard, for example, the costs of the policy and the likely unintended consequences. There may be costs in terms of health if, for example, people on low incomes maintain their level of alcohol consumption but spend less on food and heating for their family. There are likely to be substitution effects, such as the purchase of illicit alcohol or illegal drugs, which have health hazards associated with them. There will clearly be financial costs resulting from prices being artificially raised. These costs will depend on consumption levels, but they will not be trivial and they will affect people on low incomes more than those on high and middle incomes.

These are essentially the arguments that we have laid out in the Institute of Economic Affairs’ work, backed up by economic analysis. The medical establishment’s support for a minimum price implies that doctors are either unaware of these costs or believe them to be a price worth paying for the predicted benefits. This is a perfectly valid opinion, but it can only be a subjective evaluation of the costs and benefits. An estimate of lives saved in a partial equilibrium model can never, on its own, justify the implementation of a given policy. If this were the only consideration then there would be no limits to government intervention in almost any area of private economic and social activity. Economic decisions involve trade-offs. If public health academics wish to make a serious contribution to an economic debate, they must recognise this.

Our own opinion is that the costs and risks would outweigh the likely benefits, as they did in Denmark when a “fat tax” was briefly introduced. The government seems to have taken a view similar to our own on this occasion. We understand that this is disappointing for many readers of the BMJ, but it does not warrant the bizarre assortment of personal attacks and smears published in Gornall’s article.

Funding and vested interests

We trust that your readers will not be surprised that an education and research charity whose mission is to promote a wider understanding of the role of markets chooses to publish work in this field. Your readers will also not be surprised that the alcohol industry lobbies against minimum pricing. Gornall lists examples of companies with interests in the sale of alcohol having meetings with government departments as evidence that politicians were “under the influence” of the industry and that the pubic consultation “was a sham.” Neither conclusion follows from the evidence, for the following reasons.

• Nowhere does Gornall detail the activities of the large, well funded efforts over several years to promote a minimum unit price, including those of taxpayer funded organisations such as Alcohol Concern. If there has been an imbalance in access to politicians, Gornall provides no evidence for it. He merely shows that those involved in one side of the debate had some access to politicians.

• In a letter to the Telegraph timed to coincide with the publication of Gornall’s article, various doctors complained about the industry’s “deplorable practices,” but these seem to consist of no more than holding meetings with MPs. Is the “public health” lobby above engaging in such deplorable practices itself, or are meetings only deplorable when your opponents hold them? Do we not expect elected representatives to understand both sides of an argument before putting forward legislation that is such an important step and that might, in fact, be illegal (see below)?

• Gornall claims that the All Party Parliamentary Beer Group allows an unusual degree of access to MPs and quotes John Holmes of Sheffield University’s alcohol research group saying that alcohol industry representatives use these groups as a way to “talk to lots of MPs in a way that just wouldn’t be available to any public health group.” This is simply untrue. To name just five, there is an All Party Parliamentary Health Group, an All Party Parliamentary Group on Primary Care and Public Health, an All Party Parliamentary Group on Environmental Health, an All Party Parliamentary Group on Global Health, and an All Party Parliamentary Group on Smoking and Health (this last coordinated by the private pressure group Action on Smoking and Health).

• Similarly, Holmes is quoted as saying, “We can’t really change the narrative in any way—we don’t have that power—but bodies such as the Adam Smith Institute have this public megaphone which is disproportionate to the scientific merits of what they’re saying.” This is an extraordinary comment. Nobody has had more influence over the debate on minimum pricing than Holmes and his colleagues at the Sheffield alcohol unit. The findings of their computer model have been quoted on countless occasions by broadcasters, campaigners, and politicians, including the prime minister at the start of Gornall’s article.1 The influence of privately funded think tanks has been trivial by comparison. This is not surprising: the annual income of the Institute of Economic Affairs is far smaller than the turnover of a typical general practice.

• Gornall provided no evidence—because none can be found—that the drinks industry’s funding to the Institute of Economic Affairs is at all significant as a proportion of our income or that drinks industry funding is greater than, for example, funding by the retail industry, which would benefit from a minimum price. Although the institute has a policy of donor confidentiality, all public listed companies publish their donations, and—as Gornall implies but does not have the courage to say—such donations to the institute are small. Gornall mentions a (presumably deplorable) meeting between the health secretary, Jeremy Hunt, and the chief executive of Asda supermarket, saying that it “reveals the incestuous web of influence spun by think tanks and lobbying companies paid to lobby on the [alcohol] companies’ behalf.” The BMJ should provide evidence that think tanks have been “paid to lobby” or it should formally retract this slur.

• Given that Gornall wishes to imply that the funding of think tanks influences their research agenda, readers might wish to reflect on the fact that it is more than likely that the BMJ’s income is mainly from government sources and that Gornall was paid to write the article that he did. We respond to the arguments in BMJ articles and put forward by Gornall on their merits. However, people who believe that funding sources influence arguments may wish to consider that a journal that often promotes government solutions to social problems is largely funded by the subscriptions of government funded universities and members who receive their salaries from the government. Gornall should be even handed when discussing how funding might create bias in policy debates.

The “right wing” slur

While we acknowledge that discussions about policy can become heated, Gornall goes beyond what is reasonable when he refers to the input of free market institutes as a “barrage of pseudoacademic shots from the far right.” This exceeds the limits of civilised discourse. We trust that in the cold light of day the BMJ recognises that smearing opponents of price fixing as Fascists is disgraceful. An apology and retraction would be welcome.

The intellectual heritage of the Institute of Economic Affairs is classical liberal. The first editorial director was a member of the Liberal Party, though other senior staff have had a variety of political affiliations or none at all. Describing any individual as of the “far right” conjures up a set of policies in the imagination that would bear no relation to those promoted in practice by the institute’s authors. Indeed, the use of price controls and minimum prices to achieve social objectives is much closer to the policies of those that any reasonable person would regard as standing for the “far right.”

Our institute was formed in 1955 out of serious concern that overarching central planning of the economy, so in fashion intellectually after the second world war, could lead ultimately to some kind of totalitarian Fascism. It is up to the reader to make a judgment about whether the continuation of the policies of the post-1945 government would have led to such a result (as it did, for example, in some South American countries), but it was a view sincerely held by economic liberals, and it is within that economically liberal tradition that the institute continues to work.

A minimum unit price is an extreme policy, and trying to slur those engaged in free political debate is an extreme response to the dropping of that policy.

Gornall writes as if the case for a minimum price is self evident. Not only are there concerns, however, about its economic effect, it is also a policy that is unusual, perhaps even extreme. There are natural concerns about economic and social freedoms and disputes about the economic effects that Gornall does not even seem to have considered. However, the policy is also of doubtful legality. No country has yet adopted the system at a national level, and the European Commission has repeatedly warned that it is legally unsound and limits competition.

Moreover, the policy is patently regressive and will increase the cost of living for millions. There are, then, numerous reasons why the government would perform a “U turn” on this issue after consulting with a broad range of stakeholders. The thrust of Gornall’s complaint is not that industry actors and free market think tanks have had “undue influence” over the government, whatever that may mean, but that they have had a voice at all. There is no evidence whatsoever of any wrongdoing. Think tanks voiced their opinion, businesses mobilised their customers, and politicians made up their minds. It is no doubt disappointing to the BMJ that the government thought that the costs outweighed the benefits on this occasion, but the grubby insinuations and factual errors in Gornall’s article are beneath the journal.

The United Kingdom remains a putatively open society in which free speech and access to politicians and opinion formers are available to all. As the medical establishment increasingly resorts to legislative coercion in its bid to regulate lifestyles, it can expect to encounter continued resistance from those who believe in free markets and personal liberty, including a very large proportion of the British population. On issues such as minimum pricing, we believe that the medical establishment, including the BMJ, is profoundly wrong. We do, however, believe it to be sincere. (The final point in the list above is made only to demonstrate how people who think like Gornall might consider how the BMJ’s own vested interests would affect its views.)

If we are to have a mature debate about public policy, we ask that the BMJ at least recognise that we also mean what we say and to answer the arguments we make in our institute’s publications. Not one sentence of Gornall’s article tried to do this.