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Junk science and booze tax - a study in spin

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The defective model

The contemporary models he examined estimated the price elasticity of alcohol - the rise or fall in demand when the price changed. These models overlooked a number of variables, Dee found, which overshadowed conventional assumptions about elasticity. Dee also found that differences in alcohol consumption and pricing from state to state had also been overlooked. Once these were included, Dee concluded that "beer taxes have relatively small and statistically insignificant effects on teen drinking".

For the Sheffield study, Dee's work remains an obstacle they can't ignore. After devoting considerable space citing different alcohol elasticities, the researchers grudgingly concedes that there may be what they call a "potential confounding variable" at work here.

"Having taken this potential confounding variable into account, the effect of taxes on drinking disappeared," they admit, before going on to dismiss Dee's work.

Yet they cite evidence showing that he was essentially correct. "Reviews of demand models from 1989 and 1990 in the UK found that the demand for beer, wine, and spirits was generally price-inelastic", they write, undermining the entire point of the excercise. So the evidence stubbornly refuses to provide strong support for the policy direction the academics have been asked to justify.

More surprises follow in the second part of the study - the "model" - where we discover, after all, that "price increases are not matched by consumption reductions and overall spending on alcohol is estimated to increase".

In other words, consumption patterns remain the same, and drinkers absorb the cost. And what about the minimum pricing recommendation, which so captivated our newspapers last week?

"There is little empirical research investigating minimum pricing."

Oh.

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