Alcohol and Economics. Research,Politics or Industry?

Abstract

The article reviews the history of the discussion concerning the effect of alcohol consumption on the national economy. The point of departure is a discussion prompted by the prohibitionists in the Nordic countries and US who succeeded in bringing a ban on alcohol into reality. It made sense in those circumstances to ask the question. Two different situations were compared, a society where alcohol was forbidden and one where it was not. After the prohibitionists’ hope of an alcohol-free society became a lost cause in the 1930s, interest in these calculations waned for a spell. Interest was re-ignited in Finland, Norway and Sweden in the 1960s and ‘70s, however, spreading to North America and Australia in the 1980s and ‘90s. A set of international guidelines was issued on how to estimate the social costs attributable to alcohol consumption. In practice, there was a heavy bias in favour of costs, while the income side, with the exception of alcohol's presumed beneficial effect on cardiovascular diseases, was left out. Cost-of-illness studies were employed here, in which a contemporary society was compared with a fictive one, where alcohol had never existed. This article argues that such studies are not very meaningful in a research context and represent a capitulation to the desire of politicians to give political decisions a semblance of neutrality based on a common-sense approach to economics.