Unless otherwise indicated, the reference for this section is Collins and Lapsley.(6)
The 1991 study by Collins and Lapsley commissioned by the Department of Community Services and Health reviewed previous Australian and international methodologies, and provides the most comprehensive costings analysis currently available for all drug use in Australia.(2) It found that drugs cost the Australian community more than $14.3 billion in 1988, equivalent to 4.6% of gross domestic product for that year. Tobacco use cost the community $6.8 billion, accounting for 47.5% of the total estimated costs of drug abuse. In 1996 Collins and Lapsley updated the report, extending the study's coverage and further developing their methodology. The new report estimates that in 1992, the total annual cost of tobacco abuse in Australia amounted to $12.7 billion. As with their earlier study, the authors emphasise that these costings are likely to understate the actual costs of tobacco abuse. Major findings are summarised in Table 8.1.
|
|
||
|
|
|
|
| Tangible |
|
|
| Intangible |
|
|
| Total |
|
|
Source: Collins and Lapsley. 4 |
||
Tangible costs are those for which a market value can be calculated, for example losses in production due to morbidity and mortality, and health care costs. When reduced, tangible costs yield resources that become available to the community for consumption or investment purposes. Other tangible costs which the authors note are significant, but could not be accurately identified, include:
The authors note that mortality has a tangible benefit in that premature death caused by smoking releases the community from the responsibility of providing consumption resources for those smokers. However at the same time an intangible cost is incurred in the loss of the benefits of that consumption. The authors state that:
It is most important, in any study of the costs of tobacco abuse, to consider both tangible and intangible costs. A high proportion of premature deaths of smokers occur past the age of retirement from the workforce (assumed in this study to be 60). Thus these premature deaths cause relatively little production loss but relatively substantial tangible consumption benefit. If only tangible costs were considered it would be possible to reach the absurd (and indeed offensive) conclusion that the community could benefit from the premature deaths of retired direct or passive smokers. There are serious problems in estimating intangible costs but not to do so renders the results of cost estimation studies susceptible to serious misinterpretation.
Intangible costs are those ascribed to the value of loss of life to the deceased, loss of consumption by the deceased, and the pain and suffering of the sick and those around them. Unlike tangible costs, when reduced, intangible costs do not release resources for alternative uses. Although difficult to quantify, these costs are nonetheless important. This study places a value of $12,057 on the loss of a year's living, in terms of purchasing power. It does not attempt to place a value on pain and suffering.(6)
In line with the growing recognition of value of unpaid work (eg ABS, 1994), (14) the 1992 study, an allowance is made for people beyond working age, based on market rates for hiring replacements (Collins and Lapsley 1996, p13).
In 1992, avoidable costs of tobacco abuse (estimated on the basis of benefits which would accrue to the community were the most efficient possible health policies implemented and maintained over an extended period of time) were estimated to be a minimum of $5,770.30. This is almost half of total estimated costs. The potential benefits of efforts to reduce smoking are therefore substantial.(6)
This study does not attempt to quantify any economic benefits brought about by the tobacco manufacturing industry in Australia. However the updated report does allow for a consumption benefit in smoking, on the assumption that smokers who smoke fewer than ten cigarettes a day are not addicted, and that their expenditure is informed rather than compulsive. This is an extremely conservative estimate of an addiction threshold, generally regarded around five cigarettes per day.(15)