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Biffo on costs-of-alcohol report

  • June 18th, 2009

If you fancy a bit of intellectual biffo, have a look at the critique in the University of Canterbury’s Economics and Finance Working Papers. of  BERL’s study for ACC and the Ministry of Health, of the social costs of alcohol.

Eric Crampton and Matt Burgess summarize the findings detailed in their paper:

"BERL calculated annual social costs of alcohol and illicit drug consumption of $6.8 billion, including $4.8 billion in social costs from alcohol alone. The report was cited by Law Commission President Sir Geoffrey Palmer as evidence in support of greater regulation, gaining considerable media coverage.

We find substantial flaws in BERL’s method that together account for well over 90% of BERL’s calculated costs of alcohol use. Corrected external costs of alcohol use amount to $662 million and are roughly matched by the $516 million collected in alcohol excise taxes."

I can’t think of another critique of a professional research paper as blunt, or as devastating, assuming its methodology is as orthodox as it appears to this non-economist. BERL must convincingly answer the criticims (or preferably other economists for them) if their future work is to have credence.

Crampton and Burgess pull no punches:

The BERL report is wholly inadequate for use in assisting policy development .

The Law Commission, presumably committed to intellectual integrity in its work, should commission an umpire.




Who are BERL ?

I seem to remember a feeling of disquiet about their previous work used by the Engineers Union.

An exploration of the personnel and their background would be interesting.


Treasury has weighed in. See NBR and me here.

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