Social costs of alcohol and other drugs
The use of alcohol and other drugs has a number of economic impacts relating to household expenditure, decreased productivity and healthcare and law enforcement costs.
In recent years, the separate costs of tobacco, opioid use, cannabis, methamphetamine and alcohol use in Australia have been estimated using different methodologies.
The estimated social cost of alcohol use in Australia was $66.8 billion in 2017–2018. Of the total tangible amount, workplace costs were $4.0 billion, with an estimated $3.6 billion due to absenteeism. This was followed by crime ($3.1 billion), total healthcare costs ($2.8 billion) and road traffic crashes ($2.4 billion). Of the total intangible amount, premature death was $25.9 billion and lost quality of life was $20.7 billion (Whetton et al. 2021).
The estimated social cost for tobacco use in 2015–16 was $136.9 billion. While, this is substantially higher than the previous national estimate of $31.5 billion in 2004–05 (Collins and Lapsley, 2008), the difference is likely to be primarily due to differences in the approaches used to determine the estimates (Whetton et al. 2019). The most significant costs were related to the value of life lost, and pain and suffering caused by smoking attributable ill health and premature mortality, spending on tobacco by dependent smokers, workplace costs and the reduction in economic output due to premature mortality (Whetton et al. 2019).
Opioid use, including the use of any illegal opioids and the use of pharmaceutical opioids not as prescribed, was estimated to cost $15.76 billion in 2015–16. Premature mortality, criminal justice and other health care were the leading sources of costs. Tentative estimates were reported separately for: the loss of quality of life for co-residents (for example, partners and children) due to the substance use of others–$11.98 billion; and reduced quality of life for the drug consumer–$14.93 billion (Whetton et al. 2020).
The social cost of cannabis use was estimated to be $4.5 billion in 2015–16. More than half (54%, or $2.4 billion) of this cost was related to the criminal justice system, including imprisonment, administering community supervision orders and the impact on victims of crime. Although cannabis has the highest reported prevalence of consumption in Australia, the social costs attributed to cannabis were much lower than those for opioid use. This may be due to the fewer deaths attributed to cannabis use as compared with those attributed to the use of pharmaceutical opioids not as prescribed (Whetton et al. 2020b).
The estimated social cost attributable to methamphetamine use in 2013–14 was just over $5 billion dollars. This included costs associated with a range of domains including: prevention, harm reduction and treatment; health care; premature mortality; crime; child maltreatment and protection; workplace accidents and productivity (Whetton et al. 2016).
In 2021, the cost of addiction in Australia was estimated to be $80.3 billion. This includes costs associated with alcohol, tobacco, other drugs and gambling addiction. Tobacco related harm was the largest contributor to costs ($35.8 billion, 45%), followed by alcohol related harm ($22.6 billion, 28%) and harm related to other drugs ($12.9 billion, 16%). The major contributor of costs was attributed to workplace and household productivity losses (48%), followed by costs associated with excessive/harmful consumption of alcohol, tobacco, other drugs and engaging in gambling (21%) (Rethink Addiction and KPMG 2022).
Latest available household expenditure data from the Australian Bureau of Statistics (ABS) indicate that the proportion of household expenditure on alcohol and tobacco use has decreased over time.
- The proportion of household expenditure on alcohol in 2015–16 was 2.2%, down from 3.4% in 1984.
- The proportion of household expenditure on tobacco products has also decreased in 2015–16 to 0.9%, down from 1.6% in 1984 (Table S1.20; Figure IMPACT7).
- The proportion of household expenditure on alcohol and tobacco varied by main source of income.
- Households with the main income source as employee income spent a higher proportion on alcoholic beverages (2.3%) compared to those households with a main source of income as government pensions and allowances (1.8%).
- However, households where the main source of income was government pensions and allowances had a higher proportion of household expenditure on tobacco (1.7%) compared to those households with the main source of income from employee income (0.8%) (ABS 2017).
Figure IMPACT11: Proportion of total goods and services expenditure, alcoholic beverages and tobacco products, 1984 to 2015–16 (percent)