A framework for assessing the potential for a double dividend from a policy-induced reduction in alcohol consumption on the economy
Date
2023-04-13
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Publisher
Elsevier
Abstract
Objectives: Tax policies targeted at reducing alcohol consumption are typically understood to be associated
with economic losses, including in alcohol production and trade sectors. This study sought to
determine whether the overall effect of reduced alcohol consumption might be positive once improvements
in productivity associated with reduced alcohol-related consumption are considered.
Study design: This study used Computable General Equilibrium economic modelling.
Methods: An economic modelling framework was developed for Scotland, which considered the fiscal
and economic impacts of alcohol taxation and the economy-wide impacts. Simulation of hypothetical
alcohol taxes and improvements in labour productivity calibrated on losses due to absenteeism and
presenteeism in Scotland in 2017.
Results: The long-run impacts of a five pence increase in taxation alone produce negative economic
impacts on jobs and Gross Domestic Product in Scotland (1189 jobs and £71.12 million). These effects are
reduced by half e but remain negative e when the revenues from such policy are recycled to the
economy through government spending. A small improvement in labour productivity e equivalent to
4.95% of the total productivity gap from absenteeism and presenteeism estimated for Scotland e would
be sufficient to turn the economic consequence non-negative.
Conclusions: The overall macroeconomic impact of policies targeted at alcohol consumption should
include consideration of the potential productivity effect and that impact studies that do not include
such mechanisms are likely to overstate the negative economic impacts of alcohol policies.
Description
Publication history: Accepted - 10 March 2023; Published online - 13 April 2023.
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Article
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Keywords
Alcohol consumption, Alcohol taxes, Labour productivity, Macroeconomic impacts, Health savings
Citation
Sachdev, R., Roy, G. and Allan, G. (2023) ‘A framework for assessing the potential for a double dividend from a policy-induced reduction in alcohol consumption on the economy’, Public Health. Elsevier BV. Available at: https://doi.org/10.1016/j.puhe.2023.03.010.