10.0 Economic Costs and Benefits

10.1 The Amsterdam Group report emphasises the importance of the alcohol industry to the economies of the European states. It does not however refer to the subsidies received by the industry from the European taxpayer.

10.2 It will not be disputed that the industry is of considerable economic importance, although this may be exaggerated. However, it is likely that the importance of the industry as a direct source of employment is declining not because of alcohol control policies but as a result of technological improvements. The Amsterdam Group report also stresses the importance of alcohol taxation as a source of government revenue. It is however, difficult to see the force of this argument given that the drinks industry, as represented by the Amsterdam Group, strongly object to alcohol taxes.

10.3 More fundamental considerations are that:

• As any decline in the demand for alcohol would be likely to result in increased demand for other commodities, such reductions cannot be regarded as necessarily constituting a net loss to the economy.
• It is not self-evident that it is politically and socially legitimate or desirable to accept as unalterable existing levels of harm to individuals and society on the basis that the product that causes the harm generates employment and tax revenue.

10.4 Drinks industry publications are highly critical of estimates of the social costs of alcohol problems and it will not be disputed that this is a difficult area. For example, there appear to be legitimate reasons to doubt the validity of some social cost estimates which allocate a large proportion of the total costs to lost production in the workplace.

10.5 However, whatever are the legitimate areas of uncertainty, given the multifarious nature of alcohol problems and the numbers of people affected by them, the economic burden they impose on society must be huge.

10.6 An indication is given by an American estimate which did not include any allowance for lost production. This was that in 1990, the cost to the USA was in excess of $100 billion, with over 80 per cent of these costs related to treatment, morbidity and mortality. 17,35

10.7 As levels of consumption and harm are higher in some European countries than the US, it is at least possible that their social costs are also proportionately higher.

10.8 It is worthy of note that in Europe levels of consumption and harm tend to be higher in those countries with low levels of tax on alcoholic drink. It is possible, therefore, that in these countries alcohol does not 'pay its way', with the national expenditure made necessary by alcohol problems being more than the revenue derived from alcohol sales.