Monday, March 16, 2009

Pricing to Fight Alcoholism?

This is an interesting pricing application that we haven't focused on too much but that has interesting implications. How does the government set, control or use pricing to instigate social behaviors? Should they be allowed to do it?

There is an interesting debate around this subject going on in the UK. Legislators in Scotland are trying to pass minimum prices on alcohol to curb the country's drinking problem:
"Radical measures aimed at breaking Scotland's “unacceptable” relationship with alcohol were set out yesterday by the Scottish government.

Announcing the “bold strategy” to introduce a minimum price at which alcohol can be sold, Nicola Sturgeon, the Health Secretary, said the measures were an attempt to prevent strong drink being sold for “pocketmoney prices”.

Scotland would be the first country in Europe to introduce minimum pricing and there would also be a ban on “irresponsible” offers, including buy-one-get-one-free and the sale of drink as a loss leader.

Ms Sturgeon described Scotland's position as the eighth worst in the world for alcohol consumption as “simply unacceptable”, adding that the government was determined to show bold leadership over the issue.

Critics attacked the proposals as unworkable, saying that they raised the prospect of people crossing the border into England to buy cheaper alcohol, or purchasing it over the internet."

Read the full article: "Minimum price plan to curb Scotland's drink problem." At the same time, legislators in England have rejected a similar minimum price proposal, saying that they would not want to "punish the masses" especially during an economic recession. These proposed price increases are the results of studies in England, Wales and Scotland outlining the negative effects that drinking is having on the country. Opponents of the bill say that punishing people who are already having trouble making enough money in the current slump is not going to stop them from getting drunk:
"But there was also strong opposition to the idea from those who argue that responsible drinkers would be punished for the misbehaviour of a few.

"David Poley, the chief executive of the Portman Group, set up by drinks manufacturers to promote sensible drinking, said: "This would hit the pockets of hard-working families who are already struggling to make ends meet, and it would not deter those people who drink to get drunk."

"Jeremy Beadles, chief executive of the Wine and Spirit Trade Association, which represents wine and spirits producers and wholesalers, said: "It is worrying that in the midst of a recession when sales and consumption of alcohol are falling that the government should be talking about raising prices for all consumers at a time when many are already struggling to make ends meet."

Read the full article: "Government to reject proposals to set minimum prices for alcohol." On the other hand, football fans in England will get a break next year as five of the major English Premier League clubs announced reduced ticket prices in the coming season ("Fans to benefit from price cuts").
"Thousands of supporters will pay less to watch Premier League football next season after five clubs decided to cut their season-ticket prices.

Everton, Sunderland, Manchester City, Newcastle and Portsmouth are leading the way with a variety of reductions to help fans through the recession.

Five others, Aston Villa, Tottenham, Chelsea, Hull City and Arsenal have announced a price freeze.The remaining 10 top-flight clubs are yet to reveal their pricing structures."

"I think everybody's acutely aware of the economic circumstances that the country is in and the difficulties that individuals find themselves in, and money is tighter," Dan Johnson of the Premier League told BBC News.

"I think the clubs are sensitive to that and one very real way they can helps fans is reducing ticket prices."

Steve Powell of the Football Supporters' Federation said: "It's much welcome relief."


Stumble Upon Toolbar

No comments: