NEWS AND INSIGHT NEWS & INSIGHT
WHEN POLICY INTERVENTION GOES WRONG
SCHOOL: Norwich Business School, University of East Anglia COUNTRY: UK
Multibuy discounts, such as ‘three-for-two’ or ‘buy six, get 25 per cent off’ deals, are designed to encourage consumers to buy more. Therefore, it stands to reason that a ban on such discounts should lead to consumers buying less. However, this may not always be the case, according to research from Norwich Business School and the School of Economics at the University of East Anglia. Analysing the effects of a multibuy ban on alcohol sales in Scotland that came into force in 2011, the study found that the intended effect of reducing sales and curbing overconsumption was not achieved. Instead, retailers simply switched their deals to more traditional money-off discounts and this is said to have encouraged high-consumption households to increase their shopping frequency and buy more alcohol. The research, which was led by associate professor in economics Farasat Bokhari and professor of business strategy and public policy Paul Dobson, has direct implications for the UK’s ongoing attempts to devise policies that can help to alleviate the excessive consumption of unhealthy foods and drinks.
A ban on multibuy deals for foods and drinks that are high in fat, salt or sugar was due to be implemented in England in October 2022, but was postponed amid fears that the removal of such discounts would stoke inflation and raise consumer costs during a time of financial crisis for many. The study, published in the European Economic Review , suggests that a rethink may be in order as, on the basis of its evidence, the policy could easily backfire and bring about heavier spending by consumers on unhealthy foods and drinks. However, it does add that such a ban could be more effective when introduced alongside further measures, such as minimum unit pricing, that would set limits on retailers being able to offer alternative discounts and undermine the purpose of this kind of policy initiative. TBD
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Ambition | JULY/AUGUST 2023 | 13
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