The Cost Of Getting Drunk

Submitted as a feature to a national newspaper in May 2003, but it has not been used.

Keywords: Health; Regulation & Taxation;

Suppose you wanted to get drunk. How much would it cost? Perhaps six standard drinks would be more than enough – less if you were a woman. That is 90mls of absolute alcohol (ethanol). A bottle of the cheapest plonk provides 90mls of ethanol for about $6.50. You can get as drunk on beer for as little as $4.50. Some alcopops (Flavoured Alcoholic Beverages or Ready-to-Drinks) are as cheap. Spirits? Specials come at about $4.50 too.

Until a few weeks ago if you did not really care about what it tasted like, the cheapest path to inebriation was ‘light spirits’, which were 23 percent absolute alcohol by volume, rather than the 37 percent of standard spirits. They have names like ‘Vodka 62′, to indicate they were 62 percent of the standard strength. But they were much cheaper because they were taxed lower than other spirits. You could buy 90mls of ethanol for a mere $2.70 – less than a cup of coffee.

That is why the government raised the excise taxes on light spirits. The new price brings the minimum price of light spirits into line with the other cheapest drinks. That is why the government did not go for alcopops. They are already costing about as much. Boost their price and drinkers would switch to beer or wine at no cost to them. Boost the price of light spirits and the drinkers have to pay more, or cut back. The empirical evidence is that teenagers and young adults are more sensitive to price changes than the rest of us. Higher prices for light spirits will discourage their heavy drinking.

It wont stop all binge drinking. Higher taxes across all alcoholic beverages could, but would the public wear it? The grumbles from sherry, port and liqueur drinkers as they got caught in the light spirits excise duty net indicates the problem. Most of us can complain that most of our drinking is not harmful, but we pay excise duty as if it is. Alcohol excises are a blunt instrument for reducing harm. Moderate drinkers must take comfort that the excises reduce some misuse. So they are paying less general taxation to clean up the consequences of alcohol misuse.

The rising drinking problem is teenager drinking (although the most serious problems are probably still among young adults). It appears little to do with lowering the age of purchase (sometimes wrongly described as ‘the drinking age’). Teenage binge drinking was rising throughout the 1990s, even before the law change. We may need more education, we certainly need better enforcement of the law – the police just do not have the resources. I suspect the drinking habits of their parents dont help many teenagers form good drinking attitudes. The higher price of light spirits – the higher minimum price of the ethanol – will make a small contribution, but the wider challenge remains.

Note added shortly after: Some producers have responded to the new tax regime by introducing a ‘very light spirit’ which are 13.9 percent absolute alcohol. They are expected to sell for about $9.95 a 1125ml bottle. The cost of ‘getting drunk’ from them is about $5.70, similar to the minimum cost for other sources of alcohol. From the harm perspective, the excise duty hike has already proven effective.