National Drug Strategy
National Drug Strategy

The costs of tobacco, alcohol and illicit drug abuse to Australian Society in 2004/05 - Summary Report

5. Comparability with previous social cost estimates

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The authors have previously estimated the social costs of drug abuse in Australia for the calendar years 1988 and 1992, and for the financial year 1998/99. It is tempting to try to calculate the rate of change of these costs over time by comparing the four sets of estimates. However, this is an exercise that should be approached with caution.

Estimates of the social costs of drug abuse can change for a variety of reasons, the main reasons being changes in:

The cost estimates over time would be comparable (after adjustment for general price
inflation) if movements in estimated costs resulted from changes in one or more of: On the other hand, the results over time would not be directly comparable if the changed social cost estimates resulted from changes in one or more of:
Between 1998 and 2005 there has been a significant change in the relative risk information for alcohol, indicating that the 1998/99 estimates of the social costs of alcohol were significant underestimates. Therefore it is not appropriate to compare the estimates for 1998/99 and 2004/05. However, the estimates for tobacco and illicit drugs are broadly comparable, after accounting for the increase in the general price level.

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Accordingly, the basis for comparison of the 1998/99 and 2004/05 estimates of the social costs of tobacco is provided in Table 9. The same comparison for illicit drugs is provided in Table 10.

Table 9, Comparison of constant price estimates of the social costs of tobacco, 1998/99 and 2004/05, at 2004/05 prices

Tobacco 1998/99 ($m)
Tobacco 2004/05 ($m)
Tobacco per cent change
Tangible
9,184.8
12,026.2
30.9
Intangible
16,315.2
19,459.7
19.3
Total
25,500.0
31,485.9
23.5

The real social costs of tobacco abuse are estimated to have risen between 1998/99 and 2004/05 by 23.5 per cent (consisting of a 30.9 per cent increase in tangible costs and a 19.3 per cent increase in intangible costs). Although smoking prevalence has been falling steadily and smoking-attributable mortality has also fallen, the lagged effects of past smoking both on health care and on the workforce have meant that the overall social costs of smoking continue to rise. As the lagged effects work their way through the system, and assuming that smoking prevalence continues to decline, real smoking costs (adjusting for inflation) should eventually fall significantly.


Table 10, Comparison of constant price estimates of the social costs of illicit drugs, 1998/99 and 2004/05, at 2004/05 prices

Illicits 1998/99 ($m)
Illicits 2004/05 ($m)
Illicits per cent change
Tangible
6,182.8
6,915.4
11.8
Intangible
1,172.9
1,274.5
8.7
Total
7,355.6
8,189.8
11.3

During the same period the real social costs of illicit drug use are estimated to have risen by
11.3 per cent (consisting of an 11.8 per cent increase in tangible costs and an 8.7 per cent increase in intangible costs).

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