Adding up the costs

By Eric Crampton 22/06/2013


I’ve wondered what would happen if somebody added up all the various social cost figures, so I’m glad to see Bernard Keane on the case over at Crikey. Here’s the grim tally.


By Crikey’s count, various health and social issues are claimed to cost us over $260 billion, in a $1.5 trillion economy. And this is only a selection. A recent Guardian article suggested there was a massive economic cost caused by masculinity – imagine the cost to society of all the problems men cause? Not that women get away scot-free — being young and female is also a problem as far as the public health lobby goes, given girls just want to have fun.

Still, in a contested policy and funding market place, you have to sell your issue, no matter how objectively important it really is, as effectively as possible.

Note that somebody reckoned the dodgy $15b figure wasn’t big enough and so turned it into $36b.

I will quibble with Keane on one point though. He writes:

It’s more difficult if you’re an NGO charged with lobbying for non-economic outcomes, or a public health outfit that wants more money or regulation for a particular problem. You can’t point to lost jobs as a direct consequence of policy. Many health problems, for example, cost governments a lot of money to treat. But that money actuallyemploys people — doctors and nurses and other health professionals.
That’s where “social costs” come in: the costs borne by everyone else of individual decisions. And, in particular, lost productivity. That’s the new black for, particularly, the health lobby: show that your particular issue causes massive lost productivity that is a substantial cost to the economy. That’s the way to the hearts of hard-nosed decision-makers: show them the economic benefits of dealing with a particular issue.
If you can throw in other social costs, like the cost of the criminal justice system, even better. And with health problens there also the cost of “lost wellbeing”, which is measurable but not an economic cost unless it affects productivity or consumption.

The bulk of the costs measured in the cost of alcohol studies fall on the drinker himself; it’s only by assuming that drinkers get no enjoyment from consumption that these outfits are able to count private costs as social.

Update: Detmackey, in comments, points to one that we’d all missed. The ‘economic impact’ of incontinence is apparently $42.9 billion.