The Economic Costs of Alcohol Abuse
by David J. Hanson, Ph.D.
The welfare, if not the survival, of alcohol agencies depends largely on promoting the widespread belief that the economic costs caused by alcohol abuse are enormous and growing rapidly. ”Federal estimates for the costs of alcohol abuse come perilously close to fiction - or even fraud.” 1 Economists David Heien and sociologist David Pittman, utilizing standard accounting methods, determined that the annual societal costs of drinking to be about 7% of the federal estimate. 2
Alcohol agencies typically distort the costs of alcohol abuse by basing estimates on questionable assumptions, by confusing correlation with causality, by looking only at costs while ignoring the economic benefits of alcohol and by not using sound accounting principles. 3 However, the agencies' seriously flawed and inflated estimates are routinely presented to the American public as factual knowledge. 4
For example, the National Institute on Alcohol Abuse and Alcoholism (NIAAA) presents a clearly deceptive and misleading picture of the economic costs of alcohol abuse. Its estimate is actually of gross costs rather than net costs. 5 That is, the NIAAA statistic adds up all costs (including large “phantom” or false costs) without subtracting the economic benefits provided by alcohol beverages. These include income to the producers of commodities and equipment used in producing alcohol beverages, income of those who produce, distribute and sell alcoholic beverages, profits, taxes generated, and many other economic benefits to tens of millions of Americans. 6
One false cost the NIAAA uses to inflate its costs of abuse is based on “lost productivity, “ which accounts for about 80% of the total estimate.
Economist Steven Barsby illustrates the deception: Take, for example, a Manhattan advertising executive who leaves a hefty annual salary of $225,000 for a high school teaching position in rustic Vermont that pays $25,000 per year. Is t here a loss of $200,000 through the executive's working career to society? Of course not. Yet this is the nonsense which NIAAA wants us to believe. 7
These self-serving inflated estimates are used to justify the call for ever higher budgets, larger staffs, and more far-reaching legislation.
filed under: Economics