The public-private decision for alcohol retail systems: Examining the economic, health, and social impacts of alternative systems in Finland

Background: Organising alcohol retail systems with more or less public ownership has implications for health and the economy. The aim of the present study was to estimate the economic, health, and social impacts of alcohol use in Finland in 2018 (baseline), and in two alternative scenarios in which current partial public ownership of alcohol retail sales is either increased or fully privatised. Methods: Baseline alcohol-attributable harms and costs were estimated across five categories of death, disability, and criminal justice. Two alternate alcohol retail systems were defined as privately owned stores selling: (1) only low strength alcoholic beverages (public ownership scenario, similar to Sweden); or (2) all beverages (private ownership scenario). Policy analyses were conducted to estimate changes in alcohol use per capita. Health and economic impacts were modelled using administrative data and epidemiological modelling. Results: In Finland in 2018, alcohol use was estimated to be responsible for €1.51 billion (95% Uncertainty Estimates: €1.43 billion, €1.58 billion) in social cost, 3,846 deaths, and 270,652 criminal justice events. In the public ownership scenario, it was estimated that alcohol use would decline by 15.8% (11.8%, 19.7%) and social cost by €384.3 million (€189.5 million, €559.2 million). Full privatisation was associated with an increase in alcohol use of 9.0% (6.2%, 11.8%) and an increase in social cost of €289.7 million (€140.8 million, €439.5 million). Conclusion: The outcome from applying a novel analytical approach suggests that more public ownership of the alcohol retail system may lead to significant decreases in alcohol-caused death, disability, crime, and social costs. Conversely, full privatisation of the ownership model would lead to increased harm and costs.

Estimating the public health impact of disbanding a government alcohol monopoly: application of new methods to the case of Sweden

BACKGROUND

Government alcohol monopolies were created in North America and Scandinavia to limit health and social problems. The Swedish monopoly, Systembolaget, reports to a health ministry and controls the sale of all alcoholic beverages with > 3.5% alcohol/volume for off-premise consumption, within a public health mandate. Elsewhere, alcohol monopolies are being dismantled with evidence of increased consumption and harms. We describe innovative modelling techniques to estimate health outcomes in scenarios involving Systembolaget being replaced by 1) privately owned liquor stores, or 2) alcohol sales in grocery stores. The methods employed can be applied in other jurisdictions and for other policy changes.

METHODS

Impacts of the privatisation scenarios on pricing, outlet density, trading hours, advertising and marketing were estimated based on Swedish expert opinion and published evidence. Systematic reviews were conducted to estimate impacts on alcohol consumption in each scenario. Two methods were applied to estimate harm impacts: (i) alcohol attributable morbidity and mortality were estimated utilising the International Model of Alcohol Harms and Policies (InterMAHP); (ii) ARIMA methods to estimate the relationship between per capita alcohol consumption and specific types of alcohol-related mortality and crime.

RESULTS

Replacing government stores with private liquor stores (Scenario 1) led to a 20.0% (95% CI, 15.3-24.7) increase in per capita consumption. Replacement with grocery stores (Scenario 2) led to a 31.2% (25.1-37.3%) increase. With InterMAHP there were 763 or + 47% (35-59%) and 1234 or + 76% (60-92%) more deaths per year, for Scenarios 1 and 2 respectively. With ARIMA, there were 850 (334-1444) more deaths per year in Scenario 1 and 1418 more in Scenario 2 (543-2505). InterMAHP also estimated 10,859 or + 29% (22-34%) and 16,118 or + 42% (35-49%) additional hospital stays per year respectively.

CONCLUSIONS

There would be substantial adverse consequences for public health and safety were Systembolaget to be privatised. We demonstrate a new combined approach for estimating the impact of alcohol policies on consumption and, using two alternative methods, alcohol-attributable harm. This approach could be readily adapted to other policies and settings. We note the limitation that some significant sources of uncertainty in the estimates of harm impacts were not modelled.

The effects of residential proximity to bars on alcohol consumption

A person's decision to drink alcohol is potentially influenced by both price and availability of alcohol in the local area. This study uses longitudinal data from 1985 to 2001 to empirically assess the impact of distance from place of residence to bars on alcohol consumption in four large U.S. cities from 1985 to 2001. Density of bars within 0.5 km of a person's residence is associated with small increases in alcohol consumption as measured by: daily alcohol consumption (ml) drinks per week, and weekly consumption of beer, wine, and liquor. When person-specific fixed effects are included, the relationship between alcohol consumption and the number of bars within a 0.5 km radius of the person's place of residence disappears. Tests for endogeneity of the number of bars within the immediate vicinity of respondents' homes fail to reject the null hypothesis that the number of bars is exogenous. We conclude that bar density in the area surrounding the individuals' homes has at most a very small positive effect on alcohol consumption.

Changing the density of alcohol outlets to reduce alcohol-related problems

Increasingly, it seems, legal and political debates regarding the granting of new liquor licences are turning to the issue of whether the number and density of alcohol outlets makes a difference in rates of alcohol consumption and alcohol-related harm. But what is the state of the evidence on this question? In this Harm Reduction Digest Livingston, Chikritzhs and Room review the research literature on the effects of density of alcohol sales outlets on alcohol consumption and alcohol-related problems; suggest a new way of conceptualising the relationships; and discuss the implications for reducing alcohol-related harm.