Problem of Cheap Alcohol

Deaths from liver disease have doubled in Britain in recent years while other countries such as France have seen “profound” falls thanks in part to “strict” rules on marketing drink, a strongly-worded article in The Lancet claims.

Academics say that total deaths from the “wider harms” caused to society by alcohol could reach 250,000 in England and Wales by 2019 if current trends continue. (250,000 deaths from alcohol)

The Lancet report places much of the blame on the availability of cheap alcohol. In recent years, the number of pubs in the UK has declined. There has been a corresponding rise in sales of alcohol from supermarkets. Supermarkets have often been accused of selling alcohol below cost – as a loss leader to attract customers.

The government plan to:

  • raise alcohol duty 2% a year more than the inflation rate
  • Ban shops from selling alcohol below cost.

However, critics argue this does not go far enough as it still allows alcohol to be very cheap.

External Costs of Alcohol


In addition to the private costs of alcohol (cost of buying, diseases, addiction e.t.c)

Alcohol has numerous external costs. These external costs mean the social marginal cost (SMC) is greater than private marginal cost (PMC)

  • accidents due to the influence of alcohol
  • cost to NHS of treating alcohol-related diseases and accidents.
According to  Professor David Nutt, alcohol is more dangerous than drugs (BBC link) and has one of the highest external costs.
We can also call alcohol a demerit good. – People often make ill-informed choices and consume more than is good for their health.

Solutions to Overconsumption of Alcohol

  1. Tax alcohol

tax on negative externality

2. Impose minimum prices


3. Behavioural economics – nudge consumers away from buying

  • Make it harder to advertise (like cigarettes) Keep alcohol away from places where it’s easy to buy
  • Ban alcoholic drinks targetted at teenagers (alcopops)

4. Increase legal age to 21

2 thoughts on “Problem of Cheap Alcohol”

  1. I have seen many lives destroyed by alcohol. Just look around you on the street from young people to adults who spend an inordinate amount of disposable income on this, while rest of society has to pay for it in many direct and indirect ways.
    I generally have libertarian views but if the government were to tax the heck out of things like alcohol, I would have no problem with that. The money could be applied to health or education or something with a higher purpose.
    Contrary to popular belief prohibition did work. Alcohol related accidents, crime went down, health improved.
    Why not just tax alcohol at five times the rate it is now or more.


Leave a comment

Item added to cart.
0 items - £0.00