Answer to Question #118512 in Economics of Enterprise for Rajani Prajapati

Question

Liquor manufacturers use an advertising campaign to counter a government anti-binge-drinking campaign.

Answer 1

Binge drinking, which can be defined as irregular excessive drinking designed to get an alcohol fix, is different from alcoholism which involves continual reliance on alcohol. It is also different from casual consumption of alcohol where there is not an excessive intake. Binge drinking - especially by young people – is an activity that governments around the world are increasingly seeing as problematic. Some attempts at a quantitative definition of binge drinking have also been made, with consumption of five standard drinks a night or more for men, and four standard drinks a night or more for women being common yardsticks. And, yes, if you are thinking about your own behaviour, the number of drinks a night includes before and after midnight. There's no getting around the definition by declaring that the number of drinks a night means that the drinks you have before midnight are night drinks while those you have after midnight don't count because they're morning drinks! It is easy to see that these quantitative definitions would be more precise if they related to the number of drinks consumed in a session. Many of you may think that these quantitative definitions are wide of the mark because they treat 'having a few drinks' as a binge. Be that as it may, the reality is that drinking to excess to get an alcohol fix can be very harmful to drinkers themselves and can involve significant externalities associated with motor vehicle accidents, violence, excessive noise, brain and liver damage, and unwanted pregnancy. So, how have governments set about tackling the binge drinking problem? A quick search on the internet reveals that the most popular approach involves education programs which target those young people who are, or are likely to become, binge drinkers. The most popular medium for these education programs has been television advertisements. Another approach involves the idea of restricting access to alcohol. This may be done in a number of ways including lockout laws involving earlier closing times for pubs and nightclubs; restrictions on the numbers of liquor outlets; raising the legal age at which people can purchase alcohol; and more stringent policing of existing restrictions. A different and often more contentious approach is to raise the price of alcohol. This can be done, for example, by increasing manufacturers' and retailers' costs or by increasing the tax on alcohol. In the next chapter we will look at the likelihood of this approach being successful in tackling alcoholism, as opposed to binge drinking which is being discussed here. When governments impose taxes on alcohol they sometimes do this differentially, with some products attracting more tax than others. An Australian example of this policy approach can be found in the introduction in 2009 of a 70 per cent increase in the tax on premixed alcoholic drinks. These drinks, commonly known in Australia as alcopops, have spirits already mixed with soft drink in the can or bottle. They have been very popular with young drinkers.