Friday, June 30, 2023

Robert MacCulloch: Why Jack Tame should do Economics 101 (and refrain from trying to advise the government)

In a prominent One News editorial, Jack Tame asks "Why don't politicians act on our most harmful drug?" He says, "A study by Otago University, published in the Journal of Psychopharmacology, used 17 different harm criteria to assess the impact of different drugs on New Zealanders. The study considered harm to the individual as well as society at large, and in the end the results weren't even close. Top of the pops, a full 17% ahead of second place, wasn't methamphetamine or opiates or tobacco, but good old-fashioned, buy-it-at-the-supermarket booze".

On and on Tame goes, "By some estimates alcohol harm in NZ costs roughly $8 billion a year .. Governments have deferred substantive action on booze laws in NZ. They've ignored expert advice & the conclusions of their own reviews". He wants "restrictions on alcohol advertising". Great. Tame (and Otago Medical School) equate alcohol consumption with being a methamphetamine addict. They argue, based on such costs, that heavier regulation, particularly on advertising, and perhaps higher excise taxes, of alcohol is the way to go.

Spot their mistake? Alcohol consumption has huge costs to many people. It also has huge benefits to many people. Since the start of time, humans worked out the benefits wildly exceed the costs. Those benefits are hard to quantify, since they include the psychological pleasure from having a glass of wine or beer to relax. Yet they exist & estimates can be done. Has Tame not heard of cost-benefit analysis, which weighs up both sides of this equation?

More pertinently, has Otago Medical School not heard of cost-benefit-analysis? When it came to giving advice on Covid, again it only looked at the costs of not implementing long and severe lock-downs. Sure, there were costs to health outcomes, but there were also benefits. What were those benefits? Well, for one thing those severe lock-downs and the botched reaction by the Minister of Finance and Reserve Bank are partly to blame now for our high inflation, run-away cost-of-living and the recession. The billions of lost output we are currently suffering could have been used by Pharmac to buy drugs, eliminate waiting lists and save our health system by recruiting more doctors and nurses. Yes, the benefits of not locking down so hard and for so long are real and large and ongoing.

The moral of the story is that it would be good if someday the folks at Otago Medical School (and Jack Tame) who like to give advice to our government took a course on Cost Benefit Analysis. By the way, a good Covid one was done by John Gibson at the University of Waikato. His opinion piece called "Safety at all Costs Costs Lives" has a link below.


Professor Robert MacCulloch holds the Matthew S. Abel Chair of Macroeconomics at Auckland University. He has previously worked at the Reserve Bank, Oxford University, and the London School of Economics. He runs the blog Down to Earth Kiwi from where this article was sourced.


Anonymous said...

Thank goodness for that! I look forward to my glass of wine whilst preparing dinner, it’s a great relaxant. Sick of these ‘experts’ trying to take away these little enjoyments in life.

Anonymous said...

Those on the other side just want alcohol to pay its way. I've run youth groups for decades and am sick and tired of the sad stories of abuse and neglect.
The other study published this week you would have found difficult to read was the recommendation of a zero intake of alcohol for heart disease!

Anonymous said...

Well, let's also not forget, alcohol is taxed and legal, meth isn't.

Anonymous said...

Taxed and legal makes them sound so grown up and responsible. I always taught my kids responsibility and consequences was a sign of being grown up. This industry is anything but responsible or mindful of consequences. I regard them as a blight on society. If alcohol went forward to be legalized today there is no way it would happen.