Alcohol Concern’s anti-poor campaign

Although I am not in any way a socialist, I vigorously oppose anything where the poor and weak are made to subsidise the rich and the powerful. I also strongly oppose policy being enacted which will be to the net detriment of society as a whole. This is why I strongly oppose the latest report from Alcohol Concern “Binge – Drinking to get drunk: Influences on young adult drinking behaviours“. Before anybody gets the wrong idea, I support their concern about binge drinking, especially amongst minors. I also believe that if there were ways to improve this situation, then they should be enacted. However, if economic price incentives are involved, then one should also look at the unintended consequences.

The policy proposed is again a minimum price for alcohol. This has long been touted by the last Labour Government, the BMA and David Cameron. Yet none really understand the harm that it will cause to society. The proposal it to impose a minimum retail price per unit of alcohol of about 40p to 50p. This will not affect the cost in the pubs and clubs, where the cheapest pint of standard lager is around twice this level. It will dramatically impact the retail prices, in both small off-licences and the supermarkets. Below are some examples.

The way prices work is that premium products have not just premium prices, but larger profit margins both in absolute and in percentage terms. A minimum price for alcohol will invert this position. Suddenly a 3 litre bottle of cheap cider will have the highest profit margins not just in absolute, but also in percentage terms. This will create very perverse incentives for the retailer. One direct consequence will cause a rise in the price of drinks already over the minimum price. Consider the situation of the cheapest wine at £2.99 per bottle and the more mainstream wine at £4.99.

Even at 50p a unit, the cheap wine is still cheaper than the mainstream one. If the mainstream wine price remained unchanged, then the price premium to the consumer has dropped by 75%. Better quality has less of a premium. The retailer gets the margins reversed. The margin on the premium product goes from being 86% more to 48% less than the cheaper product. It makes sense for the retailer to increase the price. This increase might not be proportional to the cheap wine, but a least to make a greater margin in value terms.

Will the retailer end up making greater profit. This depends on something called elasticity of demand. To make less money on the cheap wine, demand would have to drop by over 72%. To make less money on the mainstream wine, demand would have to drop more than 53%.

Will this be of benefit to the supermarkets? It depends on the elasticity of demand. From Investopedia

Definition of ‘Price Elasticity Of Demand’

A measure of the responsiveness of the quantity demanded of a good to a change in its price. It is calculated as:

For the cheap wine the elasticity for break-even 72%/50.5% = 1.43

For the mainstream wine the elasticity for break-even 53%/25% = 2.12

Alcohol is well-known for being highly inelastic with respect to demand. That is elasticity measure is much less than 0.5. The supermarkets and the off-licences will make much, much larger profits on sales of cheap booze. With an elasticity of less than 1, consumers will end up spending more on alcohol than before, even though they are buying a smaller quantity. The biggest proportionate impact will be on those least able to afford that price rise. This is a double-hit. The poor spend a larger proportion of their income on alcohol than those on a higher income. They are also more likely to buy the cheaper forms of booze, which will have the larger percentage price rise.

The more equitable solution is to restructure the excise duties. The tax on alcohol should be shifted not just onto a per unit basis, but in such a way that it specifically targets the low-cost booze which is most attractive to minors. Therefore strong ciders (which I like), alchopops, and strong lagers should all have premium rates that are higher than, say, standard strength beers and wine. Weak taste drinks (Vodka, white cider) should have a premium over strong taste drinks such as real ale, whisky, or full-flavoured cider. This bigger added bonus is that there would a net gain in excise taxes, rather than just a gain in VAT receipts.

Monbiot and BBC – Accusing an innocent man due to a common prejudice?

Boris Johnson has something spot on about Newsnight’s accusing Lord McAlpine of paedophilia in a children’s home. Morally, it is probably today the worst sort of crime somebody could be accused of. Mass murder is not so bad, as long as you have higher motive. Even though it is meant to inspire terror into ordinary peaceful folk, it will not be called terrorism. The BBC will probably point to an excuse that as Newsnight supressed Jimmy Savile’s paedophilia due to sensitivity to Savile’s family, they did not want to fail in their duty for a second time. But there is something more than this, suggested by the Twittering George Monbiot. He was one of two prominent Twitterers to falsely “finger” Lord McAlpine as the culprit. Monbiot is now profusely apologetic, but I would suggest that his knee-jerk reaction was not out of character. It has some commonality with his take on the Gleick affair.

Earlier this year there was “released” a cache of documents from the Libertarian Heartland Institute. Peter Gleick, a dogmatic climate activist and scientist with a passionate dislike of any opposition obtained the documents by deception, and the released them anonymously. Most were innocuous, except for a “2012 Strategy Document”. Gleick was “outed” as the likely leaker, as this document was in Gleick’s peculiar writing style, not the more polished house-style of Heartland. It also contained a number of errors. George Monbiot praised Gleick’s actions as those of a “democratic hero” exposing the secret funding of climate denial by this right-wing think tank. There is no acknowledgement of the piffling size of this funding compared with government and private funding of alarmism and no acknowledgement of the evidence of forgery. Monbiot has no perspective on figures. If a few million dollars of Heartland “denial” is so effective against the billions poured into the science, Heartland should be chock full of internees infiltrated by every major Ad agency and democratic political party on the planet. Further, if there is a dominant, untenable, ideological position, then democracy is endangered not served by those who seek to confront the dominancy, but by those who seek to obliterate criticism. If the vast majority are on the side of the overwhelming truth, then publicity examining falsities can only serve to strengthen the perception of that truth. But, if it is a falsity, then exposing those who speak out to ad hominem attacks and slander is the thuggish way of silencing opposition. This principle is ingrained in the trial by jury system.

The reactions of the now BBC-departed Richard Black were in a similar vein.

What possible bearing can this have on George Monbiot’s judgement of the (false) allegations that Lord McAlpine was a paedophile? Might it be that Lord McAlpine was the former Treasurer (and very effective fundraiser) of the Conservative Party during the Thatcher years have something to do with it? When a tiny think tank can be so effective in sustaining climate denial, is not Lord McAlpine principally responsible for all that Mrs T inflicted on the Britain? And with the BBC culturally inculcated by similar pro-Guardian views, is it not conceivable that their failure to question the evidence might have something to do with McAlpine’s history?

Has Kevin Trenberth Reversed his position on Reversing the Null Hypothesis?

There is an interesting quote from Kevin Trenberth at SciGuy on Hurricane Sandy

It is true that hurricanes normally recurve and head east, especially at this time of year. So we do have a negative NAO and some blocking anticyclone in place, but the null hypothesis has to be that this is just “weather” and natural variability.

(emphasis mine)

Now would this be the same Kevin Trenberth who just 12 months ago was advocating that we reverse the null hypothesis?

“Humans are changing our climate. There is no doubt whatsoever,” said Trenberth. “Questions remain as to the extent of our collective contribution, but it is clear that the effects are not small and have emerged from the noise of natural variability. So why does the science community continue to do attribution studies and assume that humans have no influence as a null hypothesis?”

Has Trenberth now reversed his position on reversing the null hypthosis?

(I linked to SciGuy from Wattsupwiththat)

Comment made at Jo Nova’s Weekend Unthreaded.

Stephan Lewandowsky on Hurricane Sandy

Jo Nova posts on Stephan Lewandowsky’s analysis of Hurricane Sandy. Below is my comment, with the relevant links.

Lewandowsky has a lot to say about the overwhelming evidence for smoking causing lung cancer, but in substance has just this to say about the impending catastrophic global warming.

Trends such as the tripling of the number of weather-related natural disasters during the last 30 years or the inexorable rise in sea levels. Climate scientists predicted those trends long ago. And they are virtually certain that those trends would not have occurred without us pumping billions of tons of CO2 into the atmosphere.

There are 3 parts to this.

First, the economic analysis of natural disasters is Lewandowsky’s own. He ignores completely the opinions of Roger Pielke Jr, an expert in the field, with many peer reviewed studies on the subject. Pielke Jnr has shown there is nothing exceptional in the normalised cost of Hurricane Sandy. Furthermore, a 2009 report showed that New York is vulnerable to hurricanes, and the shape of the coastline makes it particularly vulnerable to storm surges.

Second, the sea level rise is a trivial issue. From the University of Colorado graph, it is clear that sea levels are rising at a steady rate of 31cm a century.

Third, he claims the predictions of unnamed “experts” have been fulfilled. A balanced analysis would point out that the CO2 levels have risen faster than predicted, but temperatures have not.

Last week I posted a proposal for analysing the costly impacts of global warming. Using the “equation”, I would suggest Lewandowsky overstates both the Magnitude and Likelihood that Sandy was caused by global warming. He misperceives the change in frequency (1/t). Furthermore, given than he has a track record in the highly biased use of statistics in his own field, and his deliberate lack of balance, the Weighting attached to anything he says should be negative. That is, like to newspapers of the Soviet Union, if Lewandowsky claims something, we should read between the lines to see what he does not say. However, unlike the Soviet Union we are still able to look for alternative opinions.

Normalized US Hurricane damage impacts

2012_rel4: Global Mean Sea Level Time Series (seasonal signals removed)