Does alcohol cost society? The answer is debatable. Alcohol may cost society or it may economically benefit society. And, of course, the costs and profits may cancel each other. But it’s essential to distinguish between drinking in moderation and abusing alcohol. Failure to do so leads to radically different estimates.
That’s because drinking in moderation is linked with better health, longer life, higher income and other positive benefits. But alcohol abuse is linked with many medical conditions, domestic conflict, and other negative results. Estimates of the how much alcohol costs society need to include benefits as well as costs
I. Health Consequences
II. Economic Consequences
I. Health Results of Drinking Alcohol
Research from around the world for decades shows that moderate drinking increases health long life. The beverage can be wine, beer, or distilled spirits (liquor).
The U.S. Centers for Disease Control and Prevention (CDC) has expanded that research. So has the National Institute on Alcohol Abuse and Alcoholism (NIAAA). Their evidence, and that of others, is important. That is, the benefits of moderate drinking outweigh the harms from abusive drinking.
The NIAAA says that if all drinkers in the US became abstainers, there would be 80,000 more deaths annually. Abstaining greatly increases the risks of heart attack, stroke, and many other life threatening conditions.
The CDC calculates that abusive drinking leads to about 75,000 deaths annually. And this number continues to decline. Therefore, these analyses show that moderate drinking saves more lives than are lost as to alcohol abuse.
This is true in other countries as well. For example, moderate drinking saves more lives in the UK than are lost through alcohol abuse. That’s according to scientists at the University of London.
Other researchers, led by Dr. Ian White, report that in the UK, 15,080 deaths were prevented through the consumption of alcohol. On the other hand, 13,216 deaths were caused by its abuse. Thus, the use of alcohol led to a net gain of 1,864 lives.
II. Economic Results of All Alcohol Drinking
Alcohol agencies tend to inflate the economic costs caused by alcohol abuse. For example, the estimate by NIAAA is actually of gross costs rather than net costs. That is, the NIAAA statistic adds up all costs. But they fail to subtract the economic benefits provided by alcohol beverages. They include these.
- Wages and income to the producers of goods and equipment used to produce alcohol beverages.
- Wages and income of those who produce, distribute, and sell alcoholic beverages.
A major phantom or false cost the NIAAA uses is based on “lost productivity.” It accounts for about 80% of the total estimate. At first glance, the idea that heavy drinkers drag down productivity seems logical. After all, they tend to have extended absences from work.
But the real question is, “Who loses what during such absences?” Obviously, the abuser and the abuser’s family may lose income. Perhaps also chance for future career advancement. The employer may or may not lose productivity. Others may fill in for the absences or new workers hired to maintain production levels. In actual life, all real burdens fall to the abuser and the abuser’s family.
If an alcoholic dies prematurely, the agency computes a career-long loss to society. But what do workers in a free society owe to government or the remainder of society? Only decent citizenship and payment of taxes. So society loses nothing economically.
Economist Steven Barsby illustrates the problem. Take, for instance, an advertising executive. She leaves an annual salary of $930,000 to teach in a rural school for $30,000 per year. Is there an annual loss of $900,000 to society? Of course not. In short, garbage in, garbage out.
The economist Weinberg poses a counter-assumption. We know that moderate drinkers earn more on average that abstainers. Research shows that income of moderate drinkers exceed those of abstainers by as much as 7 percent. Using the NIAAA’s imagery, he calls this factor “increased productivity.” He offsets the NIAAA’s $116.8 billion in lost productivity with a similar dollar increased productivity of moderate drinkers.
I will take their $117 billion and say all right, there is also a plus side to drinking. I will make the logical assumption that there is a modest increase in worker’s productivity because of moderate alcohol use. Imight use the Gross National Product as my relative scale… Now the cost figure of $116.8 billions is actually 1.2 percent of the total $9.7 trillion receipts of all business. Therefore I am making the simple assumption that the over one hundred million moderate drinkers enjoy an increase in productivity equal to the 1.2 percent of all business receipts – a total of $116.9 billion.1
The NIAAA’s “lost productivity” and Weinberg’s “increased productivity” are an economic wash.
Economist David Heien and sociologist David Pittman reject the faulty lost productivity theory. They use the common accounting concepts of internal and external costs. The NIAAA in making their estimates ignores the distinction between external and internal costs.
External costs apply only to external parties or institutions. In other words, the lost productivity constitutes voodoo economics. Also, there is little credible evidence that heavy drinkers are less productive that other members of the labor force.
Drs. Heien and Pittman, using standard accounting methods, analyzed the NIAAA data. They found that the annual societal costs of drinking to be about 7% of the NIAAA estimate.
Drinking Under Age 21
Similarly, the Pacific Institute for Research and Evaluation (PIRE) was paid by the Underage Drinking Enforcement Training Center. As a result it estimated of the economic costs of underage drinking. PIRE produced an estimate of a whopping $61.9 billion per year.
However, over 2/3 of that is based on “pain and suffering.” That’s not an economic cost. PIRE also includes other phantom costs. Only 8.7% ($5.4 billion) of the estimate actually consists of monetary costs.
A more serious problem with the PIRE estimate is that it only looks at half the equation. Completely lacking are the economic benefits from underage drinking. PIRE’s method is like looking at household expenses while ignoring household income. Its estimate is completely worthless. Perhaps worse, it’s highly deceptve.
Elsewhere, PIRE estimates that underage drinkers consume alcoholic beverages valued at $18.1 billion per year. This is an economic benefit of $18.1 billion in federal, state and local taxes, profits, wages and salaries, and income. It goes to those in farming, transportation, advertising, packaging, construction, and many other goods and services.
Using PIRE’s own figures, the economic costs of underage drinking are $5.4 billion. But the economic benefits are $18.1 billion. Thus there is no economic cost of $61.9 billion but a net economic benefit of $12.7 billion.
So, the US benefits economically from underage drinking. But any illegal drinking is not good.
It’s in the self-interest of alcohol agencies to inflate the costs associated with alcohol abuse. Yet it’s deceptive at best to report only one side of the equation. The results are highly misleading. The resulting concern leads to higher budgets and more power. But what’s in the self-interest of alcohol agencies may not be in the best interest of the public.
At the very least, we deserve honest statistics. That’s not too much to expect.
So how much does alcohol cost society? Now you have the basis for a reasonable opinion.
IV. Resources: How Much Does Alcohol Cost Society?
- Bloss, E. The economic cost of FAS. Alco Health & Res World, 18, 53- 54.
- Ford, G. The Benefits of Moderate Drinking. Alcohol, Health and Society, pp. 134-165.
- Heien, D. and Pittman, D. The external costs of alcohol abuse, J. Stud Alc, 54(3),302-7.
1. Weinberg, R. Benefits of alcohol use wash out the costs of use says noted economist, Mod Drink J, 1(5).
2. Heien, D. and Pittman, D. The external costs of alcohol abuse, J. Stud Alc, 54(3),302-7.