Showing posts with label Price floor. Show all posts
Showing posts with label Price floor. Show all posts

Friday, November 13, 2026

Case Closed: Minimum Unit Pricing Works

Now that it has been quite some years that Scotland (followed by Wales and Ireland) has implemented Minimum Unit Pricing (MUP) for alcohol (a price floor per unit of alcohol content of beverages across-the-board), we decided to revisit this by asking Dr. Google about its overall public health/safety effectiveness:

Minimum unit pricing (MUP) sets a legal floor price for a unit of alcohol, targeting cheap, high-strength off-trade drinks to reduce overall consumption and health harms. [1, 2]
Key Effects of MUP
  • Reduction in Alcohol Consumption: Evaluations of MUP (such as in Scotland) show a net reduction in adult alcohol sales and consumption of about 3%, with the largest drops occurring among households that previously purchased the most alcohol. Low-volume drinkers are largely unaffected. [1, 2, 3]
  • Declines in Mortality: Studies published in The Lancet indicate a 13.4% reduction in deaths wholly attributable to alcohol, driven primarily by drops in chronic conditions like alcoholic liver disease and alcohol dependence syndrome. [1, 2]
  • Lower Hospital Admissions: Population-level data shows a 4% to 4.1% decrease in alcohol-attributable hospitalizations, with particular reductions in chronic admissions. [1, 2]
  • Improved Health Equity: The largest health gains and reductions in deaths occur among the most socioeconomically deprived groups and heavy-drinking populations, actively narrowing health inequalities. According to research tracked by the Sheffield Addictions Research Group, impacts are heavily concentrated where harmful drinking is most prevalent. [1, 2, 3]
  • Industry and Revenue Impact: MUP is a floor price rather than a government tax; the extra revenue generated from higher retail prices goes to producers and retailers rather than the state. Comprehensive reviews show no consistent negative impact on the overall alcoholic drinks industry. [1, 2]
  • Wider Social Harms: Real-world data reveals negligible or inconsistent impacts on broader social issues such as crime, road traffic accidents, or illicit drug substitution. [1, 2]
  • Inflationary Pressure: High inflation can erode the real-world purchasing power of a fixed floor price over time, requiring governments to periodically adjust and raise the MUP rate (e.g., Scotland raising its rate from 50p to 65p) to maintain its effectiveness. [1]
The Northern Territory of Australia also implemented an MUP as well in 2018, but they eventually repealed it in 2025, apparently under pressure from the alcohol industry lobby.  But while it lasted, it seemed to be beneficial there as well.  And the biggest irony is that MUP actually increases the alcohol industry's net revenue, both retail and otherwise, despite a drop in consumption, since alcohol is relatively price-inelastic.  Unlike with taxes, which go to the government, the price difference from MUP goes right to the sellers.  Again, per Dr. Google:

Minimum Unit Pricing (MUP) generally increases overall revenue and profit margins for alcohol retailers, even though it reduces the total volume of alcohol sold. Because MUP establishes a legal floor price rather than a government tax, the extra money paid by consumers on low-cost, high-strength drinks stays directly within the retail and supply chain. [1, 2, 3, 4]
And lest we forget about the Canadian province of Saskatchewan, the very first jurisdiction to implement such a price floor based on alcohol content (unlike other Canadian provinces and some US states that do it based simply on overall volume, a dangerous loophole which perversely incentivizes the consumption of stronger beverages).  We asked Dr. Google about that as well:

Saskatchewan’s introduction of strength-graded minimum alcohol pricing (starting in April 2010) produced measurable effects across consumption, public health, and public safety: [1]
Effects on Alcohol Consumption
  • Overall Reduction: A 10% increase in minimum prices was associated with an overall drop in per capita alcohol consumption of about 8.43%. [1, 2]
  • Shifts by Beverage Type:
    • Beer consumption fell by 10.56% (with high-strength beer >6.5% ABV dropping by 22.0%).
    • Cocktails decreased by 21.3% and coolers by 13.2%.
    • Spirits decreased by 5.87%, wine by 4.58%, and liqueurs by 5.3%. [1, 2]
  • Behavioral Shifts: Consumers noticeably reduced overall intake and switched away from high-strength, low-cost "bang-for-your-buck" products toward lower-alcohol options. Off-premise sales (liquor stores) saw much larger drops than on-premise sales (bars and restaurants).
Effects on Health and Emergency Services
Emergency Department (ED) Visits: In Regina, data showed a 39.4% decrease in motor-vehicle collision (MVC) related ED visits for women aged 26 and older after a six-month lag. Rates of ED visits among young males for MVCs and assaults also declined substantially.
Effects on Crime and Safety
Nighttime Incidents: Police and regional tracking noted marked reductions in night-time alcohol-related crimes, violence, and disorderly conduct following the implementation of higher, strength-adjusted price floors.

As for any supposed adverse effects of MUP, such as resulting from very heavy and dependent drinkers switching to hard liquor, those effects are fairly minimal and short-term, and would be exceedingly unlikely if it was ever implemented in the USA, since low-end hard liquor is generally so cheap here that it would likely see the largest net price hikes (compared to other beverages) resulting from MUP.  And in any case, phasing in the MUP hike gradually would minimize any such possible effects.

(For the USA, an MUP of $1.00 per American standard drink in 2026 dollars is what we at Twenty-One Debunked would now recommend to start with, phased in over several weeks or months, and then indexed to inflation from then onwards.)

And there you have it.  Ergo, albeit after a time lag, and temporarily confounded by extraneous short-term variables such as the upheaval of the COVID-19 pandemic, it seems that MUP, especially when implemented in conjunction with moderately high alcohol taxes, can have very significant public health benefits, at least in the long run.  Even in cultures like Scotland whose drinking problems are as ingrained as they are legendary, it still seems to work well, apparently.  It is, in short, the ideal alcohol policy.  Simple, surgical, and effective.  Case closed.

Sunday, February 2, 2025

Thomas Jefferson Predicted Exactly Why Minimum Unit Pricing Would Fail

Looks like good old Thomas Jefferson, the third President of the United States and one of America's Founding Fathers, had uncannily predicted long ago why the recent "Minimum Unit Pricing" of alcoholic beverages in Scotland and Wales would end up failing so miserably even on its own terms:

"No nation is drunken where wine is cheap; and none sober where the dearness of wine substitutes ardent [i.e. distilled] spirits as the common beverage. It is, in truth, the only antidote to the bane of whiskey."

And there you have it.  Substitute "beer" or "cider" for "wine" and it still makes just as much if not more sense, especially in the UK.  That is NOT to say that the price mechanism (via taxation or otherwise) is useless, far from it.  All else being equal, we know that higher alcohol prices = fewer alcohol-related problems and deaths, at least to a point.  But the Jeffersonian wisdom above DOES add a VERY important nuance, namely that the RELATIVE price of less-concentrated alcoholic beverages (beer, wine, cider) compared with the more-concentrated distilled spirits (hard liquor) is more important than the absolute prices of either.

Consider this:  the UK as a whole already had, and still has, fairly high but (until recently) very uneven taxes on alcohol to begin with.  Wine and especially cider have long enjoyed lower taxes (and thus lower prices per standard drink) compared with beer and hard liquor there.  Thus, the heaviest problem drinkers, especially poorer ones, often went for cheap and strong cider to get the most "bang for the buck".  Enter minimum unit pricing, a price floor across the board per standard drink which had a much larger effect on raising the price of cider compared with hard liquor.  The unintended consequence?  At least some of the heaviest drinkers likely at least partially switched to liquor as a result, and ended up getting drunker than they otherwise would, with predictable negative effects.

That said, in the USA where alcohol taxes are much lower, especially for distilled spirits, such a price floor may very well be a net benefit overall.  And even in the UK, changing it to a two-tier price floor where distilled spirits would have a higher minimum price per standard drink than non-distilled beverages may very well too.  But as it stands currently in Scotland and Wales?  It's generally pretty weak sauce at best as far as public health is considered.

Oh, and don't ever expect MADD or their adjacents to admit this either.  They have in the past at least half-heartedly called for higher beer taxes, of course, but remained strangely quiet about liquor taxes.  It's almost like someone is greasing their palms, or something.  Nah, that's crazy conspiracy talk, right?

2026 UPDATE:  Looks like Scotland's minimum unit pricing was more successful on balance than was originally thought, though probably would have been even more successful had it been two-tier.  And of course, in the USA, where hard liquor is relatively cheap now, it would almost certainly have a net benefit overall.  But as the saying goes, the devil is always in the details.

Wednesday, December 27, 2017

Would A Price Floor for Alcohol Be A Good Idea?

With the issue of alcohol taxes now coming to the forefront lately, there is also another policy measure designed to reduce the problems and externalities associated with excessive consumption of alcohol:  minimum unit pricing.  That is, a setting a minimum price per standard unit* of alcohol, which like excise taxes would increase the price of the cheap stuff (that is favored by heavy drinkers) but unlike taxes would have no effect on beverages whose price is already higher than the new minimum.  After all, the effect of taxes operates through the mechanism of higher prices, so the public health benefits should be similar for both taxes and a price floor, or some combination of the two.  The biggest differences would be in efficiency (who bears the costs) versus revenue (who gets it)--though even for taxes alone, the largest effect size, at the margins, would be on the heaviest drinkers as well, for obvious reasons.

One can see the effects of a price floor on both cheap alcohol in general as well as in bulk quantities.  Take a 40 oz. bottle of 8% ABV malt liquor that now costs $2.99.  That contains a whopping 5.3 standard American drinks*.  If the price floor was then set at $0.75 per standard drink, for example, the price would go up to $3.99, a small but significant jump that really would add up for a heavy (and/or very young) drinker.  A six-pack of 12 oz. cans of say, Budweiser (5% ABV) that sells for $5.99 per six-pack, already above that hypothetical price floor at $1.00 per standard drink--and that is a low-ball price for a six-pack in the USA--would be unaffected.  A 12-pack of the same product selling for $9.99 would still be unaffected, and an 18-pack could be sold for as little as $13.50.  But that 30-pack now on sale for $14.99?  Well, the price for that would go up to $22.50.  And that 15.5 gallon keg that currently sells for $100 or less, excluding deposit?  Well, that contains about 168 standard drinks, so the minimum price for that would jump to $126 per keg.  And those prices for bulk quantities would really add up for anyone who frequently throws or attends keggers or other large drinking parties--leading to somewhat fewer such occasions and/or less beer to go around at such parties.  And now combine that with even a modest tax hike and you get a marginal effect size that is greater than either measure alone.

What about the hard stuff?  Well, we see that while most of it would remain unafffected by a price floor, the cheaper end of the scale would be nonetheless be affected as well in a similar manner to beer.  Take a "handle" (i.e. a 1.75 L bottle) of the cheapest vodka, whiskey, or whatever that currently costs $12.99 in some places.  That contains about 40 shots of 1.5 oz each, so at 80 proof that would equal roughly 40 standard drinks per bottle.  If the minimum price were set at $0.75 per standard drink, that bottle would now cost about $30.  Even a mere $0.50 per drink floor price would raise the price of the cheap booze to around $20 or so.  So while distilled spirits would be the least affected category overall, they would in fact be even more affected than beer at the lower end.   And this would also lesssen the yawning disparity between on- and off-premise prices, thus reducing the urge to "pre-load" or "front-load" with cheap booze before going out to the bar, pub, or club.

So yes, Twenty-One Debunked would be fine with a price floor of $0.75 per standard drink, just as we would be fine with raising alcohol taxes across the board to as high as $24/proof-gallon for all beverage types.   A combination of both would also be good as well.  Given how moderate and responsible drinkers would barely be affected at all by either measure as noted (as long as the thresholds are not set much higher than the ones above), they hardly qualify as blunt instruments and are in fact highly efficient in practice.  That's a small price to pay for liberty.

* One "standard American drink" or "standard unit" of alcohol is equal to one measure of the following:  one 12 ounce can/mug/glass of beer at 5% ABV, one 5 ounce glass of wine at 12% ABV, or one 1.5 ounce shot of distilled spirits at 80 proof (40% ABV).  This is known as alcohol equivalence.  Contrary to popular opinion, these all contain the same amount of alcohol.  So keep this in mind if or when you drink.