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

2. A brief summary of methodological issues

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The aggregate social costs of alcohol abuse to the Australian community in 2004/05 are calculated to have been over $15 billion (Collins & Lapsley, 2008a). Greater detail of this estimate is provided in Section 3 below. This estimate was produced by comparing the actual Australian situation (in relation to such issues as mortality, morbidity, health costs, workplace productivity, crime levels and road accidents) with a hypothetical alternative situation which would have prevailed had there been no alcohol abuse in the preceding 40 years. This alternative counterfactual situation is purely hypothetical in that it is almost universally recognised that it would be impossible to eliminate all alcohol abuse. Thus, the issue arises as to what proportion of aggregate abuse costs could potentially be avoided over time, if the appropriate public policies were implemented. In other words, the issue is to identify the proportion of the aggregate social costs of alcohol abuse which is avoidable. The minimum achievable level of alcohol abuse is known as the Feasible Minimum.

Single et al. (2003) make the following distinction between avoidable and unavoidable costs of substance abuse:

Collins et al. (2006) identify four broad reasons for estimating avoidable costs (these reasons are discussed in detail in Appendix A): Top of Page

The Health Canada avoidable cost guidelines address the following broad possible approaches towards the estimation of avoidable costs:
  1. the distributional approach, an epidemiological technique which examines alternative counterfactual situations;
  2. the Arcadian Normal, which identifies best performance (in terms of abuse-related mortality and morbidity outcomes) in countries which have similar relevant economic and demographic characteristics to the country under study;
  3. exposure-based comparators, an approach similar to the Arcadian Normal approach, but based on risk exposure rather than mortality and morbidity outcomes; and
  4. evidence on the effectiveness of anti-abuse policy interventions in other comparable jurisdictions.
The choice of which method(s) to adopt is very much a pragmatic one, depending on data availability and information on the effectiveness of relevant public policies. In this study, the first three methods are considered, but the most relevant focus of analysis has proved to be the fourth approach.

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