National Drug Strategy
National Drug Strategy

The avoidable costs of alcohol abuse in Australia and the potential benefits of effective policies to reduce the social costs of alcohol

8.1 Policy implications

prev pageTOC |next page

Alcohol abuse imposes serious social costs on the Australian community. Collins and Lapsley (2008a) estimate that these costs were, at a minimum, $15.3 billion in 2004/05. However, there is no suggestion that public policy interventions could, or indeed should, eliminate the entirety of these social costs, even in the long run. Economists argue that public policy should attempt to achieve a situation in which the marginal cost of reducing alcohol abuse is exactly matched by the value of the marginal benefits of this reduction. If the marginal benefit is greater than the marginal cost, then the community could experience a further net benefit from a further reduction in alcohol abuse. On the other hand, if the marginal benefit were less then the marginal cost, alcohol abuse would be at a sub-optimal level.

Economists, including the present authors, would certainly not claim that the optimal level of alcohol abuse is zero. Below a certain level of alcohol abuse, the public resources devoted to producing a further reduction in abuse would be more efficiently devoted to alternative uses. This economic analysis puts public health policy in the broader context of the economy as a whole, rather than considering public health in isolation from other calls on public resources.

The present study does not attempt specifically to identify the optimal level of alcohol abuse. It does, however, attempt the less ambitious objective of identifying the proportion of the total social costs of alcohol abuse which could be reduced by the implementation of policies for which there is current evidence of cost effectiveness.

The nature of the underlying public health quantitative research upon which the current estimates are based is such that estimates of avoidable costs should be treated as being approximate. There are, nevertheless, some extremely useful policy conclusions to be drawn from the research described in this paper. These conclusions relate to the proportion of alcohol abuse costs which can be considered, in the real world policy environment, to be susceptible over a period of time to policies designed to reduce these costs. The conclusions also indicate the types of interventions which are likely to prove to be efficient in reducing these costs.

Top of Page

The Arcadian Normal and alcohol-exposure approaches, whose results are presented in Table 27, both indicate that in the order of 40–50 per cent of the social costs of alcohol abuse can be reasonably considered to be avoidable, given the adoption of appropriate policies. Since this estimated range is based on performance outcomes in other countries, it may well be conservative. It is unlikely that any single country has implemented the complete range of indicated interventions.

There is strong evidence that substantial reductions in social costs could be achieved by implementing, or improving the implementation of, a range of interventions which include:

There is also strong, but less quantifiable, evidence that resources should also be devoted to: It is reasonable to consider that there may be very strong support for initiatives to address those aspects of alcohol abuse which result in harm to others than those who consume the alcohol. (An obvious analogy would be the wide acceptance of the unfairness of involuntary, or passive smoking.) Those who bear involuntary costs of abusive alcohol consumption include the babies born with foetal alcohol syndrome, individuals who experience traffic injuries and deaths caused by alcohol-affected drivers, and the victims of other alcoholattributable crime. It may be that policy strategists recommend that additional weighting should be given to allocate resources to interventions in these areas, even where there is not yet rigorous economic evaluation.

Top of Page

prev pageTOC |next page