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Suggest how an economist would approach the problem of alcohol abuse - Essay Example

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The loose laws addressing the vice have not made the matter any easier. The effects have been both health-wise and economically not only to the individual but also to the country as a…
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Suggest how an economist would approach the problem of alcohol abuse
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Download file to see previous pages Numerous examinations on this subject have been conducted by economist to determine the impact of the price of alcoholic beverages to alcohol consumption. Despite the varied nature of the researches conducted, the conclusion is common. That an increase in the price of alcoholic beverages results to a decline in drinking and heavy drinking, as well as the consequences of alcohol use and abuse. This is in direct relevance to the fundamental law of economics called the downward sloping demand curve. It states that, as the price of a product rises, the quantity demanded for that product decreases.
Another way to curb the abuse of alcohol is the use of government policy. Economists have found that the most ignored policy of controlling alcohol abuse is the most effective and important (Chaplouka, Grossmann & Saffer, 2002). This is the raising of the taxes levied on all alcoholic beverages. The decline of federal, state and local taxes on alcoholic beverages over the years by considerably high margins is a show of ignorance to this policy. The effectiveness of this policy of this policy is due to the fact that the use and abuse of alcoholic beverages has been found to be sensitive to price. However, to address the matter with economical intellect the policy should be implemented after accounting for the effects of inflation.
Prescription drugs fall under the industry of pharmaceuticals, which is funded in the country as part of Research and Development. In the recent past and the present this industry has been found to have very large costs of maintaining and they are always fixed. It is estimated that twenty percent of sales from research based pharmaceuticals has been devoted to research and development compared to four percent for other industries (Nebbit, 2000). This huge investment in relation to prescription drugs, therefore, results to high prices for these products. Since the products are essential for life, their consumption is fixed and may not be greatly ...Download file to see next pagesRead More
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