What is the real cost of alcohol misuse?

By Sandra Jones, Director of the Centre for Health Initiatives at the University of Wollongong.

Recent media attention has been focused on the comments of an economist from New Zealand who has questioned the validity of estimates of the social costs of alcohol abuse.

Eric Crampton, a senior lecturer in economics from Canterbury University, has been widely cited as stating that only a fifth of the social costs of alcohol abuse asserted by the Australian study could be “plausibly counted” and that many of the costs counted in the estimate (such as household, healthcare, productivity and traffic accidents costs) were “inadmissible” in a standard economic framework[1].

The media debate has focused on the ‘independence’ and ‘agendas’ of the various parties.

On the one hand: Dr Crampton’s research, and his visit to Australia, was funded by the alcohol industry. He asserts his academic independence and that his findings were not influenced by his source of funding. However, he does concede that “I expect that if the paper had provided alternative conclusions they would not have invited me to this.”

On the other hand: Dr Crampton argues that the Collins and Lapsley report relied on incorrect economic arguments to support “paternalistic” policy to combat excessive drinking[2].

But let’s look at the report……

The 2008 report by David Collins and Helen Lapsley “The costs of tobacco, alcohol and illicit drug abuse to Australian society in 2004/05” estimated the net cost of alcohol misuse (social costs minus social benefits) at $15.3 billion per annum.  This includes $10.8 billion in tangible costs (such as healthcare costs, loss of productivity, and policing and court costs) and just under $4.9 billion in intangible costs (such as loss of life, pain and suffering).

It is this latter category, intangible costs, that causes me to question to point of Dr Crampton’s argument. As Collins and Lapsley themselves point out, these are the costs that are the most difficult to estimate.

So, what are the real costs?

Dr Crampton’s argument – as presented to the journalists at his industry luncheon – is that (his) “worry has been that while the $15 billion is economically meaningless, it is policy meaningful. If people expect this is a cost to … their back pocket because of other people’s behaviour, that increases the demand for certain types of policy,”

I think Dr Crampton is missing the point. I for one will not vote for (or against) government policy because the costs of death and suffering have been estimated at $5 billion, any more than I would if they were estimated at $10 billion or $100 billion.

As an Australian, I care that alcohol is second only to tobacco as a preventable cause of drug-related death and hospitalisation, with an estimated 3,000 deaths per annum; I care that our emergency rooms are clogged with people suffering from the immediate effects of their, or others, misuse of alcohol; and I care that every year almost 600 Australians aged 65-74 die from injury and disease, and 6,500 are hospitalised, as a result of drinking above the NHMRC guidelines[3].

I also care that 43% of Australians perceived physical assault in a public place to be a problem in their neighbourhood[4]; that alcohol is a significant contributing factor in domestic violence[5]; and that alcohol abuse is an important risk factor for child abuse, maltreatment and neglect[6].

As a parent, I care that 13% of all deaths among Australians aged 14-17 years – that is one per week – are a direct result of alcohol consumption; and that alcohol is responsible for the hospitalisation of 60 teenagers each week.

Perhaps Dr Crampton – and the alcohol industry – could spend a little less time arguing the exact calculation of the financial costs of alcohol and think about the real costs.  I am sure that every parent who has lost a teenager from alcohol misuse would estimate that single cost at much more that $15 billion.

Let’s stop pretending we don’t have a problem with alcohol.


[1] http://www.smh.com.au/national/industry-attacks-alcohol-abuse-research-20120828-24z6f.html#ixzz25Vl6ATBk

[2] http://www.brisbanetimes.com.au/national/health/alcohol-abuse-estimates-attacked-20120828-24yty.html

[3] http://www.nhmrc.gov.au/your-health/alcohol-guidelines/alcohol-and-health-australia

[4] Steering Committee for the Review of Commonwealth/State Service Provision (SCRCSP) 2009. Report on government services 2009. Melbourne: Productivity Commission. http://www.pc.gov.au/gsp/reports/rogs/2009

[5] Marcus G & Braaf R 2007. Domestic and family violence Studies, surveys and statistics: pointers to policy and practice. Sydney: Australian Domestic and Family Violence Clearing House. http://www.austdvclearinghouse.unsw.edu.au/PDF%20files/Stakeholderpaper_1.pdf

[6] Dawe S, Harnett P & Frye S 2008. Improving outcomes for children living in families with parental substance misuse: what we know and what we should do. Child abuse prevention issues no. 29. http://www.aifs.gov.au/nch/pubs/issues/issues29/issues29.html

This was originally posted on the Centre for Health Initiatives blog

2 Responses to “What is the real cost of alcohol misuse?”

  1. 1 deserthead September 20, 2012 at 11:46 pm

    I understand over 1,200 Australians are killed every year in motor vehicle accidents. All of which would be entirely preventable if speed limits were reduced to, say, 20 kph on all roads, or more effectively if all motor vehicles were simply banned outright.

    So would you, for one, vote for such measures? If not, why not?

  2. 2 Jun September 25, 2012 at 11:23 am

    According to Dr Richard Franklin, there has been 257 Australian people drowned to death in between 2006-7. All of which would be entirely preventable if swimming is prohibited by law.

    Would you vote for such measures?

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