Externalities from Alcohol Consumption

When it comes to alcohol consumption and the externalities, it is vital to create a distinction between the external and internal cost and benefits. Basically the internal cost and benefits of the use of alcohol are borne by the consumer and the externalities are borne by third parties. Greenfield asserts that externality in health care takes place when actions of one individual directly affect the daily lifestyle of another. There are cases when the consumer does not consider all the costs and benefits of using alcohol, and the price which is paid by the consumer for use of the goods does not reflect the social cost and benefit of such use. Under such circumstances it can be said that the market has failed to moderate itself and that the government has to step in and act as regulators in terms of dealing with the externalities of alcohol consumption.

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Externalities in alcohol consumption are characterized by the harm that is suffered by individuals who take part in acute or high consumption of alcohol as well as long term consumption that is referred to as chronic consumption. Binge drinking creates externalities through adverse behavioral and health consequences that have to be borne by relatives of the affected as well as the government through the payment of hospital bills. In line with the views of Greenfield et.al, the tangible nature of the externality due alcohol can be attributed to the cost of additional public services. Under extreme cases, binge drinking can lead to cardiac arrest, stroke and even fetus damage among pregnant women. Externality comes in through the fact that the cost is borne by the relatives and the government. More so, when one takes part in acute consumption of alcohol, they are more likely get involved in accidents or engage in acts of violence as well as other antisocial engagements such as theft. Furthermore, we see direct externality at work when an individual fails to deliver in high capacity as they used to deliver before they were overtaken by the urge of excessive drinking.

The government has to understand the general impact of alcohol consumption on the Gross Domestic Product of the country. Reduced production capacity of an alcoholic affects the performance of that institution in which he/she operates, and if individual reduction in workforce is aggregated, the end result will be a country that has less output than its competing peers. Research indicates that majority of young people are engaged in excessive consumption of alcohol, this is factor that is important to note considering the health effect it may end up having and the impact on government expenditure on health care.  Young people make up the most active part of the economy, and the moment they get engaged in excessive alcohol consumption, they end up not being as productive.

The aggregate impact on the economy is negative. The healthcare system will become expensive as the hospital will take more time and resources in treating the casualties of the various internal costs of alcohol. The relationship between a long period of alcohol consumption and the damage it has health wise is shaped in a letter J if represented graphically, where the moderate consumption of alcohol has some positive effects while high level of consumption has extremely negative effects. For instance, Barker opines that in the long run, consumption of alcohol leads to the risk of cancer, pancreatitis and hypertension. There are certain people who are of the opinion that the type of alcohol has different effect on an individual’s health. This is a fallacy as the amount of alcohol and not the type of alcohol is what makes up the negative impact that is faced by the society. 

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The risk associated with alcohol consumption has a positive relationship with the amount that is consumed by an individual under a single session. But Greenfield et.al indicates that even moderate levels of drinking raises the risk of accidents in significant measure and can lead to high level of damage. When a road accident involving cares occur, it may be fatal to the drunken individual and other unfortunate people around. It means that the drunken individual should die because of his/her carelessness, but an externality where a pedestrian is knocked down and killed by a swerving drunk driver is what the society would have seen as fair and just. I would take an example of a feature news story? I watched on BBC where a drunken man knocked down five people on their way from church in Boston. This was heartbreaking considering the five individuals were from different families and the gap that they had left in their families. Out of a drunken stupor by a single individual, several others have to be affected through such an accident. The public health system at times is overwhelmed by people who are brought in with serious injuries from accidents whose main cause is drunk driving.

Even as we keep asking what the government to come in and bring sanity when it comes to dealing with the external cost of alcohol, we fail to understand that corporations that manufacture alcohol are able to contribute to the premature deaths and illnesses since they have the ability to externalize, meaning that they are able to shift the real costs of their product to the society through the cost of alcohol consumption. According to Baker, the corporate externality of alcohol firms does not only affect the individual consumer; it has other externalities that affect the public health sector. The waste from the alcohol companies is disposed into the environment and they Unclear what "they" refers to. The waste? The externalities? may be a source of several airborne diseases. The externalities created by the companies lead to a vicious cycle where the companies make more sales and revenues while to the society it leads to more diseases, accidents, and deaths.

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Most of the alcohol companies are not doing a favor to the public health sector due to their continued tendency of hiding of critical information concerning the effect of their products from consumers. The consumers are informed of the side effects of the alcohol as well as the fact that it has no nutritional value, they may not continue being consumers of the same. Alcohol companies just like the tobacco companies use their position from the courts which allows them some leeway for their non-disclosure. As Greenfield et.al explains, the fact that other industries have also hidden such information does not help at all. It is through such practices that the market is actually departing from classical theory of perfect market where consumers and the producers have equal knowledge. The hard time of explaining the consequences of alcohol consumption is left to people who have nothing to do with its production. The healthcare sector is tasked with informing the public of the effect of alcohol to their health and social life as the companies that produce the same products continue to go about with their business as though nothing wrong is happening in the society.

The public which pays the cost of the negative externality in most cases is not aware that they are in a web, and that they will continue to be at the center of a tab where the companies continue to make money while the public sector is being affected health wise. The public is vital to ensuring that negative externalities of alcohol are cut and eventually eliminated, but this will not be possible unless the public has enough information about the effect of alcohol to general health of the public. Greenfield et.al tends to agree with the assertion that to deal with the negative externalities of alcohol on public health, the government has to force the companies into internalizing the external costs of alcohol consumption. This means that if a company’s product causes death the government should be able to force that company to foot the bill related to any form of treatment or services provided to the deceased. Through this the companies will be able to look at the cost and benefit and decide whether it is cost effective to continue manufacture of such products.

I have to state that it is not all about the negative element in alcohol consumption, there are proven cases which state that moderate alcohol consumption gives certain health benefits related to reduction of risk related to ischaemia disease of the heart. The benefit cannot be attained through binge drinking; it is received through regular and informed patterns of consumption of the drink. In any case an individual is engaged in excessive drinking of alcohol, then they are at a higher risk of getting affected through ischaemia. There are countries such as New Zealand, which have suffered the effect of ischaemia through a large part of its population. In this country, data indicate that chronic heart disease led to a 23% of deaths in 1997 and in the same year they had 2000 cases of ischaemia.

The young population has become quite difficult to deal when it comes to issues that are related to alcohol. I have to agree with Greenfield et.al that most of the young people I have personally interacted with do not believe that alcohol can be a direct cause to some of the health problems that have been stated above. They are always adamant that life is all about fate, and that one will suffer the negative externalities due to fate and not due to design. By design they seem to believe that road accidents at times would occur to an individual who is sober in circumstances similar to when one is drunk. Situations like these pose a dilemma as to how one may be able to deal with such sentiments. It is not all about helping them see the effect of alcohol by giving examples, what one has to do is to allow the same alcohol indulgent young minds to experience the effects first hand.

In conclusion, the main idea that comes to mind is that alcohol consumption has a negative impact on the society. It means that the alcohol manufacturers have to take some responsibility. They ought to take responsibility through informing the young people from the point of consumption. It is not easy to implement a regulation, which would require that people agree to terms and conditions of drinking, but at least when people have critical information some may try to read through and understand. The government has the legislative role of ensuring that the alcohol companies are giving the customers an overview of what they have to expect from using the product.

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