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The Price of everything The Value of Nothing: A (Truly) External Review Of BERL’s Study Of Harmful Alcohol and Drug Use

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Abstract

In March 2009, Business and Economic Research Limited ("BERL") published “Costs of Harmful Alcohol and Other Drug Use,” a report jointly commissioned by the Ministry of Health and ACC. BERL was asked to measure the costs of drug and alcohol abuse to New Zealand society, but not to evaluate specific interventions. BERL calculated annual social costs of alcohol and illicit drug consumption of $6.8 billion, including $4.8 billion in social costs from alcohol alone. The report was cited by Law Commission President Sir Geoffrey Palmer as evidence in support of greater regulation, gaining considerable media coverage. We find substantial flaws in BERL’s method that together account for well over 90% of BERL’s calculated costs of alcohol use. Corrected external costs of alcohol use amount to $662 million and are roughly matched by the $516 million collected in alcohol excise taxes. The BERL report is wholly inadequate for use in assisting policy development.

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  • Matt Burgess & Eric Crampton, 2009. "The Price of everything The Value of Nothing: A (Truly) External Review Of BERL’s Study Of Harmful Alcohol and Drug Use," Working Papers in Economics 09/10, University of Canterbury, Department of Economics and Finance.
  • Handle: RePEc:cbt:econwp:09/10
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    File URL: http://www.econ.canterbury.ac.nz/RePEc/cbt/econwp/0910.pdf
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    Cited by:

    1. Eric Crampton & Matt Burgess & Brad Taylor, 2011. "The Cost of Cost Studies," Working Papers in Economics 11/29, University of Canterbury, Department of Economics and Finance.

    More about this item

    Keywords

    costs and benefits of alcohol usage; alcohol policy; New Zealand; adequacy of consultancy reports;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists

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