Wednesday, 28 August 2013

Abusing science in the cause of paternalism

The Institute of Economic Affairs in London has released a new policy paper on Quack Policy – Abusing Science in the Cause of Paternalism by Jamie Whyte.

A quick summary of the paper's findings is given by:
  • Recent examples from the U.K. of flawed evidence-based policy include the proposal to introduce a minimum alcohol price, the ban on smoking in enclosed public spaces, measures to reduce greenhouse gas emissions and attempts to increase gross national happiness.
At the heart of argument is an idea central to economics but not to the thinking of many policy makers: trade-offs. Take, as an example, the case of alcohol pricing. It could be true that raising the price of alcohol will reduce the number of alcohol-related injuries, in much the same way that lowering the speed limit will reduce the number of traffic accidents. From this narrow perspective, demands for a minimum price of $0.50, say, for a unit of alcohol and a 20 mph limit on urban roads can be viewed as "evidence-based", both could show a reduction in harms. Which would be a good thing. But, enjoying a drink and getting from A to B in good time are also good things. If the aim of the policy is to have fewer alcohol based injuries then we can have them but it will come at the cost of millions of dollars in higher drink prices and might mean more moonshine and drug use; that is people will substitute cheaper black market alcohol or drugs for more expensive legal alcohol. In the same way we can have fewer traffic accidents but it comes at the cost of driving at a crawl and being less efficient.

In any policy making both costs and benefits have to be taken into account, that is we have to consider both the winners and the losers from a change in policy. Any policy analysis which considers only the bad is not worth the paper it is written on. In Whyte's view the failure to acknowledge trade-offs and competing preferences is endemic in much of the so-called evidence-based policy. By looking at only the "bad side" of a situation you run the very real risk of causing more harm than good. Why not, for example, have a $500 minimum price of alcohol or a 5 mph speed limit. I'm sure that the evidence would show that both policies would reduce harm and thus would pass as "evidence-based policy". But it comes at the cost of denying people the pleases of drinking and the benefits of driving. Would it be a trade-off worth making?

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