Pricing as a means of controlling alcohol consumption

Abstract

Background

Reducing the affordability of alcohol, by increasing its price, is the most effective strategy for controlling alcohol consumption and reducing harm.

Sources of data

We review meta-analyses and systematic reviews of alcohol tax/price effects from the past decade, and recent evaluations of tax/price policies in the UK, Canada and Australia.

Areas of agreement

While the magnitudes of price effects vary by sub-group and alcoholic beverage type, it has been consistently shown that price increases lead to reductions in alcohol consumption.

Areas of controversy

There remains, however, a lack of consensus on the most appropriate taxation and pricing policy in many countries because of concerns about effects by different consumption level and income level and disagreement on policy design between parts of the alcoholic beverage industries.

Growing points

Recent developments in the research highlight the importance of obtaining accurate alcohol price data, reducing bias in estimating price responsiveness, and examining the impact on the heaviest drinkers.

Areas timely for developing research

There is a need for further research focusing on the substitution effects of taxation and pricing policies, estimation of the true tax pass-through rates, and empirical analysis of the supply-side response (from alcohol producers and retailers) to various alcohol pricing strategies.

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