Minors and Alcohol: Team Supply and Demand
What are the factors that influence consumer attitudes and behaviour in minor’s consumption of alcohol?
Background, Relevance and Significance
Alcohol consumption by minors has become a prevalent issue within Australia and around the globe. The government plays a vital role in the control and regulation of the alcohol industry by setting the legal drinking age, monitoring alcohol related advertising and enacting taxes on alcohol. These controls and regulatory measures aim to protect minors from the negative impact alcohol.
To examine the government’s role in the formation of minor’s attitudes towards alcohol consumption. Explored through following research questions.
- What influence does the legal drinking age have on minor’s consumption of alcohol?
- How does the marketing of alcoholic products impact minor’s consumption of alcohol?
- What was the effect of the alcopop tax on alcohol consumption by minors?
Research questions examine background, past performance, current and global policy, academic studies and apply rational consumer choice theory to explore economic problem and provide policy recommendations.
Research Question 1 | What influence does the legal drinking age have on minor’s consumption of alcohol?
Legal Drinking Age
The legal drinking age defines when a person can purchase and possess alcoholic beverages and varies across the globe. Figure 1. shows the age limits for purchasing alcohol in different countries (World Health Organisation, 2016). More than 65 percent of countries allow persons 18 years or older to consume alcohol at a bar or restaurant and more than 55 percent allow these persons to purchase it at an off-premise store.
Figure 1. Legal Drinking Ages Across the Globe
Source: World Health Organisation, 2016
Figure 2. shows the percentage of 15 – 19 year olds who have experienced heavy drinking in the past month (World Health Organisation, 2016).
Figure 2. Percentage of 15 – 19 year olds who have experienced heavy drinking in the past month.
Source: World Health Organisation, 2016
Comparison of Australia and China and exploration of the United States policy depicts effectiveness of the legal drinking age as an influencing factor for minor attitudes to alcohol.
Australia and China – Comparison
Figure 1. shows Australia and China both have the legal drinking age of 18 years old, however Figure 2. shows that Australia has almost double the number of minors who had recently drunk, 20.4% and 38.9% respectively. To examine this difference and the effectiveness of the legal drinking age as an influencing factor to the age alcohol is introduced to minors, it is important to consider other significant influences, social culture and parental and family attitudes.
The Australian culture has been found to tolerate and even encourage generous rates of drinking (Roche et al, 2007). In 2016 and 2017, Australia’s total alcohol consumption was approximately equal to 186 million liters of alcohol (Crawford-Williams, Roberts, & Watts, 2013). In Australia, the average age minors first consumer alcohol is 16-year-old (National Alcohol & Drug Knowledge Base, 2016).
Asian culture gives great importance to family values and traditional ties. There is a stronger expectation that children should be loyal and obey their parents and elders (Sudhinaraset, Wigglesworth, & Takeuchi, 2016). Comparatively to Australia, there is a much less tolerate and discouraging attitude towards minors consuming alcohol. This social influence supports the effectiveness of the legal drinking age in China and can contribute to this difference found in Figure 2.
United States – Policy Exploration
In 1984, The US enacted a national minimum drinking age of 21 to purchase alcohol. Prior to this, the majority of the US had a legal drinking age between 18 – 20. This increase in the legal drinking age resulted in an expected drop in the sales and consumption of alcohol of minor. Consequentially, there was a decrease in alcohol related traffic fatalities among minors by 16% (Centres of Disease Control and Prevention, 2011). This highlights the role of government intervention and the effectiveness of the legal drinking age to protect minor consumers.
Policy inference and Conclusion.
The effectiveness of the legal drinking age in reducing minors’ consumption of alcohol must consider other governing factors such as social culture and parental influence. Due to the cultural complexity of drinking alcohol, any standardized legal drinking age around the world seems unrealistic.
Research Question 2 | How does the marketing of alcoholic products impact minor’s consumption of alcohol?
Alcohol is marketed through traditional platforms including television and radio, and increasingly sophisticated advertising and promotion techniques, including sponsorship, linking alcohol brands to sports and cultural activities, product placement and new digital platforms such as podcasting, social media and more. Difficulty arises in how to target young adult consumers without exposing minors to the same marketing (World Health Organisation, 2010).
Alcohol Marketing impact on Minors
A study conducted by Alcohol Research and Education between 2000 to 2011 examined the influence of paid alcohol advertising on television and minor’s alcohol use finding greater exposure to alcohol advertising was positively associated to minors drinking and partaking in risky drinking behaviour.
Australian Current Policy
The Alcohol Beverages Advertising Code, ABAC, governs the content in alcohol ads. Current code sets (Section 3b.) Responsibility to Minors. A Marketing Communication must NOT:
(i) Have a Strong or Evident Appeal to Minors
(ii) depict a person who is or appears to be a Minor unless they are shown in an incidental role in a natural situation (for example, a family socializing responsibly) and where there is no implication they will consume or serve alcohol;
(iii) depict an Adult who is under 25 years of Age and appears to be an Adult unless:
- they are not visually prominent;
- they are not a paid model or actor and are shown in a Marketing Communication that has been placed within an Age Restricted Environment; or
(iv) be directed at Minors through a breach of any of the Placement Rules.
Free-to-air television age restricted environment allows alcohol marketing (“FAQs alcohol ads | ACMA,” 2019):
- Between 12 – 3pm on school days
- 8.30pm – 5am on any other day
- Allowed during sports programs on public holidays and weekends (beginning 6pm Friday)
Government Intervention Global landscape.
Comparatively, the global landscape includes four main categories (Esser & Jernigan, 2018)
- No restrictions
- Voluntary or self-regulation
- Partial restrictions
- Complete bans.
In 2012, nearly 40% of 159 countries that provided information to the WHO on their alcohol marketing policies reported no restrictions. Self-regulated codes allow corporations to develop their own guidelines. However, reviews of more than 100 of these self-regulations suggest gaps that limit the effectiveness, including the protection of vulnerable populations such as youth. Study in Denmark found switching from a partial restriction to a comprehensive ban on all multiple media types had a 100% probability of cost savings. Despite the effectiveness, such bans occur in only 10% of the 159 countries who reported their alcohol marketing status to WHO.
Application of Rational Choice Theory
Rational choice theory highlights the demand for equal opportunity to have all information for consumers to form rational attitudes that will provide the highest satisfaction (Our Textbook). When promotional advertising for alcohol is produced, it highlights the marginal benefit or enjoyment of consuming it, then there is a demand for communication that illustrates the marginal cost or negative harm of drinking. Discouraging campaigns not only targeted towards minors but also to educate society on the impact of the drinking culture exposed to minors. DrinkWise and the Outdoor Media Association (OMA) launched in September 2018 campaign encouraging parents to reflect on the way they drink around their children. See Figure 3.
Figure 3. DrinkWise Campaign, 2018
Policy Inference and Conclusion
Government role required to protect developing minors from alcohol marketing found to have a positive association on minor’s alcohol consumption. Australia currently operates under partial restrictions. Consideration of global restrictions landscape, the WHO recommends the use of regulatory or coregulatory frameworks. Rational choice theory highlights the demand for balanced information, highlighting a demand for discouraging campaigns and marketing to illustrate the marginal cost of drinking allowing consumers to consider marginal cost and benefits when forming attitudes surrounding adolescent consumption of alcohol.
Research Questions 3 | What was the effect of the alcopop tax on alcohol consumption by minors?
Current Alcopop Tax & Consumer Choice Analysis
In 2008 the Rudd government introduced legislation enacting a tax on ‘alcopops’ or ‘ready-to-drink’ (RTD) alcoholic beverages by seventy percent. The purpose of this tax was to dissuade teenagers from consuming (RTD) alcoholic beverages by increasing their cost and making them unaffordable, with the goal of reducing binge drinking among teenagers. Evidence collected by the Australian Bureau of Statistics (2010) suggests the tax was successful in reducing the consumption of RTD alcoholic beverages among teenagers, with consumption of RTD’s falling since 2008 – a 30.2% decrease in the form of RTDs ready for consumption between 2008-09. See Table 1. and Figure 3.
|Table 1. Spirits & Ready to Drink (pre-mixed beverages) consumption in Australia – Years ended 30 June –|
|(‘000 litres of pure alcohol)|
|Spirits||19 355||r20 160||22 865|
|Ready to Drink (pre-mixed beverages)||18 123||18 693||13 056|
|Apparent per capita consumption (litres/persons)|
|Ready to Drink (pre-mixed beverages)||r1.07||r1.08||0.74|
READY-TO-DRINK (pre-mixed) BEVERAGES(a)(b)
Policy Inference & Recommendation
Uniform Volumetric Tax
Following the advice of the Australian Medical Association and a government funded study conducted by Deakin University (Ananthapavan, Brown & Sacks, 2018), the introduction of a uniform supply-side volumetric tax would be the most effective in reducing the risky consumption of alcohol by minors. For instance, there is opportunity to set a standardized price per standard drink which would in effect, negate the ability of the alcohol industry to target adolescents with cheap alcohol. The reason for minor’s preference towards alcopop or RTDs came largely from their affordability relative to their strength. Minors today subscribe to this same logic, preferencing drinks such as cask wine over RTDs or traditional bottled wine.
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A study conducted by the World Health Organisation (2010) argued that “almost all of the econometric studies have shown that a rise in the price of alcoholic beverages leads to a fall in alcohol consumption” irrespective of consumer behaviour categories. As a consequence, a comprehensive tax plan whereby all drinks are taxed according to their relative strength would reduce both minor’s consumption of alcohol and overall alcohol consumption. One difficulty with applying such a broad tax is the change to the current alcohol tax system. This system enforces variant excise duties in the form of volumetric taxation on beer, spirits and RTDs.
Furthermore, the current tax system also includes a completely separate Wine Equalization tax, an ad valorem taxation strategy, whereby, the tax applies to the value of the wine rather than the volume. To demonstrate the variation in the current alcohol pricing system, I will refer the Deakin study which demonstrates the need for a universal volumetric tax – “Under the current system, the total price (including taxation, in 2013 prices) of a standard drink (equivalent to 10g of alcohol) varies from around A$0.65 for cask wine to A$2.79 for ready-to-drink beverages” (Ananthapavan, Brown & Sacks, 2018). In response to such findings, the study suggested a new universal volumetric tax of 84 cents per standard drink across all alcoholic beverages. The price effect of this universal volumetric tax are illustrated in Figure 5.
The following policy recommendation is easy to understand and complete across all alcoholic beverages. However, due to Australia’s prominent alcohol exports industry, a volumetric tax will have a significant negative impact on exports, across all alcoholic beverages. In particular, the low to medium priced wine market which is taxed little as it abides by an ad valorem tax. Further analysis is needed to dictate whether this supply-side volumetric tax could be made exempt in regards to alcohol for export.
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