The Economist’s Way of Thinking About Alcohol Policy

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.