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Friday, November 12, 2010

A New Measure of Alcohol Affordability for the UK



To present revisions to the official UK measure of alcohol affordability published by the National Health Service (NHS) Information Centre. The revisions address the following problems in the official measure:
  • (a) The income measure used in the calculation is a measure of the income for the whole population of the UK, not income per capita.
  • (b) The income measure includes ‘imaginary’ items, namely imputed rentals and attributed income from insurance policies.
  • (c) The income measure is inconsistent in its treatment of housing costs.
  • (d) The adjustment for inflation makes the measure unnecessarily complex and can have counter-intuitive effects.
The revised measure has the same essential structure as the NHS measure, being the ratio of income to price of alcohol. Adjustments were applied to official income figures, and adjustments for inflation were removed. Results: The revised measure shows that affordability has levelled off since 2003, in contrast to the NHS measure, which shows it continuing to rise until 2008.  

The revised measure corrects a basic error of failing to divide total income for the UK by number of people in the population. This alters the measure but is more correct. Further improvements result in a measure that correlates more closely with UK alcohol consumption over the last decade. 


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