Undercover Economist

Even those addicted to alcohol drink less when costs rise, says economist Tim Harford. Because we all respond to prices – even to the point of the day we die or give birth.
If Chief Medical Officer Sir Liam Donaldson has his way, one day we will have to pay at least 50p a unit to buy booze. That’s £1.50 for a large can of strong lager. Most off-licence and supermarket booze costs less than that, so it would certainly change the cost of a drink.
But would it make any difference to hardened drinkers? Many people think not. After all, a tenner would still pay for 20 units – nearly a week’s safe drinking, or some people’s idea of a good night out.
So many people think this would punish ordinary drinkers without deterring the winos, brawlers and wife-beaters. The government won’t touch it. Conservative health spokesman Andrew Lansley says it’s an idea more to do with economics, than medicine.
The odd thing is most economists will think Sir Liam is on to something. Raise the price of drink, we figure, and people will drink less. That’s because people respond to prices in the most unlikely situations.
Margaret Mitchell commented in Gone with the Wind: “Death, taxes and childbirth! There’s never a convenient time for any of them.”
She was wrong: it turns out that death and childbirth can be, and are, rescheduled thanks to tax incentives…

Continued at BBC News Magazine.