NAD
Commentaries
NAD
Social cost of alcohol: Not always useless even
if subjective?
Hans Olav Melberg
Klaus Mäkelä argues that calculating the
units, say, the number of children who live
cost to society of alcohol and drugs is ”not
with parents who have problems with alco-
a promising research programme.” In ad-
hol and so on. This gives us an idea of the
dition to the empirical problems in meas-
size of the problem, which is more easily
uring these costs, he claims that little is
understood than ”the grief caused by alco-
gained by expressing consequences like
hol represents 10 dollars per capita every
grief and sorrow in monetary units, and
year.” For this reason it is probably a good
in any case it cannot be done objectively
idea to stick to natural units and avoid ag-
because it involves value judgements. He
gregate monetary valuations in most cases.
also argues in favour of focusing on meas-
Sometimes, however, we do need at least
uring the extent of alcohol problems in
a rough and implicit monetary estimate of
natural units such as the number of arrests
all the costs. For instance, when determin-
for drunkenness and hospital days associ-
ing the correct tax on alcohol it would be
ated with alcohol consumption.
wrong to only consider hospital costs and
In terms of substance, I find myself in
other direct and tangible costs associated
broad agreement with Mäkelä’s argument:
with the use of alcohol. These costs are
existing estimates of social costs are high-
only the tip of the iceberg, and to ignore
ly imprecise and based on value judge-
intangible and indirect costs would result
ments about what we should include and
in a low price, which does not consider
exclude in the estimation (Melberg 2010).
the harm alcohol causes to children and
Still, progress is not made by too much
others close to the users (Pogue & Sgontz
agreement even among friends, so in an
1989; Røgeberg 2007).
attempt to improve our understanding of
Against this, one may claim that it is
the issue, I will play the devil’s advocate.
perfectly possible to give politicians infor-
First, I will question whether monetary
mation in natural units and allow the poli-
valuations are always useless. Second, I
ticians to make the implicit weighting nec-
will argue that the subjective nature of the
essary to proceed from the natural units
estimated costs may sometimes be viewed
to the socially desirable tax rate which is
as a virtue and not as a sin.
based on monetary units. Given the level
One of the reasons we care about misuse
of arbitrary answers one tends to receive
of alcohol is that it causes much grief and
when asking people about their monetary
sorrow to people close to the user – part-
valuations, this seems like a wise practical
ners, children and relatives. The extent of
approach (Melberg et al. 2011).
this suffering can be expressed in natural
10.2478/v10199-012-0030-y
At the same time, given that we are playUnauthenticated
V O L . 29. 2012 . 4
Download Date | 6/17/17 2:39 PM
NORDIC STUDIES ON ALCOHOL AND DRUGS
357
ing the devil’s advocate here, one could
If the main problem is the practical
ask why we at least in principle should not
problem of unreliability and not the sub-
want information from individuals. Are
jective nature of the experience, an obvi-
we assuming that people are too stupid or
ous way forward is to focus on the valu-
irresponsible to make such trade-offs and
ations of those who actually have experi-
that we should make them for them? Are
ence with the issues. If we want to know
we too quick to assume that difficult trade-
how bad it is to suffer from loss of hearing,
offs are impossible in principle (Aldred
we may ask and observe the behaviour of
2006)? To argue that measuring grief in
those who have experienced hearing prob-
money is impossible or useless because
lems. For instance, observing the amount
it is a subjective issue is not the same as
of money that they are willing to spend on
arguing that it does not provide relevant
hearing aids implicitly tells us something
information. In fact, it is precisely the sub-
about the monetary value they place on
jective feeling of harm that we are inter-
hearing. It is not perfect, but it provides
ested in measuring. If a person does not
some relevant information that policy
mind his neighbours’ loud music, there is
makers could use when they make the
no reason to intervene. If they dislike it,
unavoidable trade-offs between how much
we have rules and fines. Claiming that the
money should be spent on treatment and
dislike is subjective is beside the point.
preventions for various diseases.
What we want to measure is the extent to
In conclusion, then, I agree with Mäkelä
which alcohol causes problems for others,
that the calculation of the social cost of
and there is no need to assume that they
alcohol is not a promising research pro-
should all feel the same, or that the feeling
gramme. I also agree that in most cases we
must be ”objective” before it is relevant.
would be better off measuring the problem
In an ideal world, then, a perfect politi-
in natural units. However, there also seem
cian setting a tax rate on alcohol should
to be some cases in which it would be use-
be interested in information about how
ful to have a more aggregate measure of
strongly individuals are affected by alco-
the harm, such as when setting taxes and
hol use as judged by the individuals them-
prioritising between different sectors. And
selves. The problem is more practical: so
the argument that the harm is inherently
far it seems that the methods used to elicit
subjective, while true, may not undermine
monetary or other quantifiable measures
its use in these contexts. It is precisely the
often produce unreliable results. Methods
individual’s subjective feeling of harm
such as contingent valuation (asking peo-
that is policy-relevant. At least in princi-
ple), discrete choice analysis (asking peo-
ple and sometimes!
ple in a sophisticated survey) and directly
and indirectly observed willingness to pay
Declaration of interest None.
may help, but ultimately it is difficult to
estimate something that the individuals
themselves often do not have a clear idea
about. In this sense, the problem is not the
principle, but the practical problems.
358
NORDIC STUDIES ON ALCOHOL AND DRUGS
V O L . 2 9. 2 0 1 2 . 4
Hans Olav Melberg, researcher
Department of Health Management and Health
Economics
University of Oslo
E-mail: [email protected]
Unauthenticated
Download Date | 6/17/17 2:39 PM
REFERENces
Aldred, J. (2006): Incommensurability and
monetary valuation. Land Economics, 82
(2): 141–161
Melberg, H.O. (2010): Conceptual problems
with studies of the social cost of alcohol.
Nordic Studies on Alcohol and Drugs 27
(4): 287–303
Melberg, H.O. & Hakkarainen, P. & Houborg, E.
& Jääskeläinen, M. & Skretting, A. & Ramstedt, M. & Rosenqvist, P. (2011): Measuring
the human costs of drug use for friends and
family of drug users. The results from a survey in four Nordic capitals. Nordic Studies
on Alcohol and Drugs 28 (2): 105–121
Pogue, T.F. & Sgontz, L.G. (1989): Taxing to
control social costs: The case of alcohol.
The American Economic Review 79 (1):
235–243
Røgeberg, O. (2007): Svake mennesker – Om
adferdsøkonomi, regulering og usunt
konsum. Norsk Økonomisk Tidsskrift 121:
74–94.
Unauthenticated
V O L . 29. 2012 . 4
Download Date | 6/17/17 2:39 PM
NORDIC STUDIES ON ALCOHOL AND DRUGS
359
Unauthenticated
Download Date | 6/17/17 2:39 PM