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The Economist’s Way of Thinking About Alcohol Policy

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  • Harry Clarke

Abstract

This paper assesses policy interventions in alcoholic drink markets from an economic perspective. This perspective assumes that alcohol yields consumption benefits as well as costs, and that society’s utilitarian objective is to maximise the excess of alcohol’s benefits over its costs. The economic perspective rejects the common community focus on the ‘gross cost of illness’ consequential to alcohol consumption. The economic approach to alcohol policy instead emphasises information, self-control and the external costs of consuming alcohol. For consumers with alcohol dependencies, a policy mix emphasising the role of cues and self-control is suggested.

Suggested Citation

  • Harry Clarke, 2008. "The Economist’s Way of Thinking About Alcohol Policy," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 15(2), pages 27-44.
  • Handle: RePEc:acb:agenda:v:15:y:2008:i:2:p:27-44
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    File URL: http://press-files.anu.edu.au/downloads/press/p87541/pdf/15-2-AN-1.pdf
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    References listed on IDEAS

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    1. Viscusi, W. Kip, 2002. "Smoke-Filled Rooms," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226857473, July.
    2. Lundborg, Petter & Lindgren, Bjorn, 2002. "Risk Perceptions and Alcohol Consumption among Young People," Journal of Risk and Uncertainty, Springer, vol. 25(2), pages 165-183, September.
    3. Henry Saffer & Dhaval Dave, 2006. "Alcohol advertising and alcohol consumption by adolescents," Health Economics, John Wiley & Sons, Ltd., vol. 15(6), pages 617-637.
    4. Badi H. Baltagi, 2007. "On The Use Of Panel Data Methods To Estimate Rational Addiction Models," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(1), pages 1-18, February.
    5. Cameron, Lisa & Williams, Jenny, 2001. "Cannabis, Alcohol and Cigarettes: Substitutes or Complements?," The Economic Record, The Economic Society of Australia, vol. 77(236), pages 19-34, March.
    6. Pogue, Thomas F & Sgontz, Larry G, 1989. "Taxing to Control Social Costs: The Case of Alcohol," American Economic Review, American Economic Association, vol. 79(1), pages 235-243, March.
    7. Jon Nelson, 2003. "Advertising Bans, Monopoly, and Alcohol Demand: Testing for Substitution Effects using State Panel Data," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 22(1), pages 1-25, February.
    8. E. A. Selvanathan & S. Selvanathan, 2004. "Economic and demographic factors in Australian alcohol demand," Applied Economics, Taylor & Francis Journals, vol. 36(21), pages 2405-2417.
    9. repec:aph:ajpbhl:2000:90:6:854-857_7 is not listed on IDEAS
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    Citations

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    Cited by:

    1. John Freebairn, 2010. "Taxation and Obesity?," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 43(1), pages 54-62.
    2. John Freebairn, 2010. "Special Taxation of Alcoholic Beverages to Correct Market Failures," Economic Papers, The Economic Society of Australia, vol. 29(2), pages 200-214, June.
    3. Preety Srivastava & Xueyan Zhao, 2010. "What Do the Bingers Drink? Micro-Unit Evidence on Negative Externalities and Drinker Characteristics of Alcohol Consumption by Beverage Types," Economic Papers, The Economic Society of Australia, vol. 29(2), pages 229-250, June.
    4. Mark Harrison & Alex Robson, 2011. "Prevention No Cure: A Critique of the Report of Australia's National Preventative Health Taskforce," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 18(2), pages 7-26.
    5. Kym Anderson, 2010. "Excise and Import Taxes on Wine Versus Beer and Spirits: An International Comparison," Economic Papers, The Economic Society of Australia, vol. 29(2), pages 215-228, June.

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