Mar 10 2009

Negative externalities of consumption: Britain’s “inebriated hooligans”

Some Britons Too Unruly for Resorts in Europe – NYTimes.com

According to the article above, Great Britain exports more trouble to the rest of Europe than any other nation.

A recent report published by the British Foreign Office, “British Behavior Abroad,” noted that in a 12-month period in 2006 and 2007, 602 Britons were hospitalized and 28 raped in Greece, and that 1,591 died in Spain and 2,032 were arrested there.The report did not distinguish between medical cases and arrests associated with drunkenness and those that had nothing to do with it. But it did say that “many arrests are due to behavior caused by excessive drinking.”

The unruly behavior of Britons does not always end when the vacation is over, either:

Earlier this summer, flying home to Manchester from the Greek island of Kos, a pair of drunken women yelling “I need some fresh air” attacked the flight attendants with a vodka bottle and tried to wrestle the airplane’s emergency door open at 30,000 feet. The plane diverted hastily to Frankfurt, and the women were arrested.

How is this story related to economics, you may be wondering? Well, it’s really about a market failure. The over-consumption of alcohol by British tourists is creating spillover costs for the societies (and police forces) of the nations in which the tourists get themselves into trouble.

As governments often do when market failures exists, some British consulates have begun taking action to reduce the negative externatlities associated with their nationals’ drunkenness.

Worried about the increase in crimes and accidents afflicting drunken tourists, the British consulate in Athens has begun several campaigns, using posters, beach balls and coasters with snappy slogans, to encourage young visitors to drink responsibly.

“When things do go wrong, they go wrong in quite a big way,” said Alison Beckett, the director of consular services. “What we’re trying to do here is reduce some of these avoidable accidents where they have so much to drink that they fall off balconies and are either killed or need huge operations.”

Because British tourists only consider their own enjoyment (benefits) while on vacation, they consume alcohol at a level that fails to take into account the social costs of their behavior. In economic terms, the marginal private benefit of alcohol consumption exceeds the marginal social benefit, representing an overallocation of resources towards alcohol in tourist towns. Government action by British consulates is aimed at reducing demand (marginal private benefit) among tourists, shifting the MPB curve back towards the MSB curve, in the hope  that alcohol consumption will decline to the socially optimal level, where marginal social benefit equals marginal social cost.

There seems to be a fine line between too much drinking and not enough in the tourist spots of Europe. As far as the impact that British drunkenness has on business, some in the tourist trade believe the very prospect of wild parties and cheap booze is what keep the local economies afloat. Crack down too much on the wild Britons, and business could collapse as customers attracted to the anarchy stop arriving.

Discussion questions:

  1. Is overconsumption of alcohol a market failure? If so, what type could it be classified as?
  2. If the tourist nations were serious about cracking down on drunk tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
  3. How are proprietors of bars and clubs in resort communities benefiting at the expense taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece reflect the social cost? Explain.

About the author:  Jason Welker teaches International Baccalaureate and Advanced Placement Economics at Zurich International School in Switzerland. In addition to publishing various online resources for economics students and teachers, Jason developed the online version of the Economics course for the IB and is has authored two Economics textbooks: Pearson Baccalaureate’s Economics for the IB Diploma and REA’s AP Macroeconomics Crash Course. Jason is a native of the Pacific Northwest of the United States, and is a passionate adventurer, who considers himself a skier / mountain biker who teaches Economics in his free time. He and his wife keep a ski chalet in the mountains of Northern Idaho, which now that they live in the Swiss Alps gets far too little use. Read more posts by this author

299 responses so far

299 Responses to “Negative externalities of consumption: Britain’s “inebriated hooligans””

  1. rpilleon 13 Dec 2012 at 6:00 pm

    • The over consumption of alcohol is a market failure because the people who drink alcohol create spill over costs. These costs are for additional health care and police forces.
    • To control the consumption of alcohol in touristic resorts the government could increase the taxes on alcohol. With an increase in price the demand for alcohol would decrease. Furthermore the government could make restrictions on how many bars or clubs are allowed to sell alcohol.
    • When people go bars they usually drink a lot of alcohol. If a lot of people go to bars or clubs it is likely that there will be an overconsumption of alcohol. The more alcohol that is sold the higher the revenue of the bars or clubs. This is beneficial for them. However when the people start damaging the bar or something else it becomes less beneficial. In this case the social cost would rise because the government would have to pay for the damage on the street.

  2. Andreas K.on 13 Dec 2012 at 7:26 pm

    Is overconsumption of alcohol a market failure? If so, what type could it be classified as?

    I think that overconsumption of alcohol is a market failure, because there are several negative externalities. The overconsumption leaves high costs for the public, rather than to the individual that decided to drink excessive alcohol.

    If the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs?

    If tourist nations were serious about cracking down on drunken tourists, then they should set a price floor above the current price and therefore decreasing the quantity taken. It would decrease the demand for alcohol which means that less people will take alcohol and therefore there’s less trouble.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece, reflect the social cost? Explain.

    In the main season of tourism, the bars and clubs might benefit, because since there are more people in the streets it will be most likely that they go into the bars and spend some money on drinks. Seen this way, the bar and club owners have a higher income, but there it’s not beneficial on the social side. There is a higher risk of the trouble causers, because the people will cause more trouble when they’re drunk.

  3. Andreas K.on 13 Dec 2012 at 7:31 pm

    rpille, I agree with your post, but could a price floor a good idea for the second question?

  4. TranHon 14 Dec 2012 at 9:45 pm

    Is over-consumption of alcohol a market failure? If so, what type of failure could it be classified as?
    Yes, alcohol over-consuming is a market failure. I would classify it as negative externality because drinking alcohol is bad for health of the people who consume it.

    If the tourist nations were serious about cracking down on drunken tourists, what economic actions could they take in the resort communities where most of the trouble occurs?
    They could make a rule about drinking alcohol, for example, depends on what level of the situation was, they could either ask the drunken tourist to pay money or force them to leave the resort because of the sake of other guests.

    How are proprietors of bars and clubs in resort communities benefiting at the expense of taxpayers from other parts of the tourist nations? Does the private cost of running a bar in a place like Malia, Greece, reflect the social cost? Explain.
    I believe that bars and clubs in resort communities can make quite a lot of benefits buy selling alcohol since usually, the price of alcohol there are more expensive than when you buy it at the store. Plus, especially some resorts don’t want their guests to drink there, in this case, the alcoholics will probably find some places like bars or clubs to drink. And yes, I think that the private cost reflects the social cost because for the instance the tourist is drunk and damages the property of the bar/club, then they are not beneficial. In this case, the social private price will be higher than social price.

  5. diligentlap4618.snack.wson 11 Jan 2015 at 11:17 pm

    diligentlap4618.snack.ws

    Negative externalities of consumption: Britain?s ?inebriated hooligans? | Economics in Plain English

  6. Laura Gyldenbjergon 08 Dec 2015 at 11:06 am

    Laura Gyldenbjerg

    Negative externalities of consumption: Britain?s ?inebriated hooligans? | Economics in Plain English

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