The costs due to the harm caused by the products and practices of the alcohol industry are a major obstacle to achieve SDG 8: “Promote sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all”.
The products and practices of Big Alcohol cause multiple economic harms:
- Alcohol harms human capital and drains societies’ resources,
- Alcohol impedes economic growth,
- Alcohol leads to staggering costs due to lost productivity,
- Alcohol harms economic activity,
- Alcohol contributes to significant proportion of youth not being education, employment or training (NEET),
- Alcohol fuels workplace harm through absenteeism and presenteeism, and
- Big Alcohol fuels harm through workers’ rights abuses.
The economic burden of alcohol worldwide is substantial.
Overview of alcohol’s economic harm worldwide
A recent worldwide overview showed: the economic costs of harm due to alcohol amount to 1306 Int$ per adult, or 2.6% of the GDP. About one-third of costs (38.8%) were incurred through direct costs, while the majority of costs were due to losses in productivity (61.2%).
The Organization for Economic Cooperation and Development (OECD) released a landmark report in 2021 detailing the economic harm caused by the alcohol industry. Alcohol-related diseases and injuries incur a high cost to society. Life expectancy is nearly one year lower than it would be, on average, if alcohol consumption in a population would be lower.
An average of 2.4% of health spending in OECD countries goes to dealing with the harm caused by alcohol consumption – and the figure is much higher in some countries. In addition, poor health due to alcohol consumption has detrimental consequences on labour participation and productivity.
Combined with the impact on labour force productivity, it is estimated that GDP will be 1.6% lower on average in OECD countries annually over the next 30 years due to alcohol harm, varying from 0.2% in Turkey to 3.8% in Lithuania.
Reduced productivity of employees amounts to US$ 595 billion (adjusted for purchasing power), according to the report.
Economic harm due to the products and practices of the alcohol industry in different countries around the world
Harm caused by the alcohol industry costs Norway between $9 to $11 billion annually, reports Actis.
Oslo Economics calculated the costs caused by the products and practices of the alcohol industry to Norwegian society.
They report that the harm caused by the alcohol industry costs Norway between 80 to 100 billion Norwegian kroner ($9 to $11 billion) annually. This is a staggering figure.
For context, the annual costs of alcohol harm in Norway amount to the cost of three Winter Olympics in Beijing 2022.
A recent study published by the National Drug Research Institute (NDRI) at Curtin University in Perth exposes the drain of resources caused by alcohol harms in Australia. The study, called “Examining the Social and Economic Costs of Alcohol Use in Australia: 2017/18” was funded by the Australian Government Department of Health. It is the first national update in a decade analyzing the cost of alcohol harm.
The study conservatively estimated the cost of harm caused by the products and practices of the alcohol industry to the Australian people to be $66.8 billion. This is far higher than the estimated cost in 2010 which was $14.4 billion.
According to the study, alcohol products caused $18.2 billion in tangible costs to people and communities in Australia.
Evidence shows that alcohol harm is a much bigger problem in Canada than opioids, but the harm caused by Big Alcohol receives much less political attention compared to opioids, for instance.
It is estimated that annually alcohol causes:
- 18,000 deaths,
- Costs amounting to an estimated $16.6 billion annually in
- health care,
- lost productivity,
- criminal justice, and
- other direct costs.
Between 2006 and 2010, the costs of pervasive alcohol harm in the United States had increased. This trend is likely accelerating, given rising number of alcohol deaths in the U.S. during the pandemic.
A 2015 study from the Centers for Disease Control and Prevention (CDC) revealed that the costs from alcohol harm drain U.S. economy. In four, years alcohol-related costs to society had climbed fifteen cents per beverage, due to decreased workplace productivity and healthcare costs. Alcohol consumption was the third-leading preventable cause of death in the United States in 2015.
Alcohol harm cost the U.S. economy $249 billion in 2010, or $2.05 per beverage.
This means a significant increase from $223.5 billion, or $1.90 per beverage, in 2006.
Most of these costs are due to
- reduced workplace productivity,
- crime, and
- the cost of treating people for health problems caused by alcohol.
A 2020 report showed that alcohol harm continues draining society’s resources in Germany. The DHS Yearbook Addiction 2020 is published by the German Center for Addiction Issues (DHS) and reveals the heavy alcohol burden on German society.
Overall economic harm due to Big Alcohol
Pervasive alcohol harm is draining precious resources. According to the DHS Yearbook Addiction 2020, the annual economic costs of alcohol harm amount to €57 billion. But government revenue only reaches a tiny fraction of this with €3.2 billion from alcohol taxation every year.
Economic harm at city level in Germany
Health insurance company AOK reported that in Dortmund, Germany there were almost 6000 days of sick leave due to alcohol last year.
The insurance company noted that even without festivals and social gatherings during the ongoing COVID-19 pandemic, people in Dortmund were absent from work on 5,938 days in 2021 due to alcohol problems. This shows that there is a significant productivity loss caused by the products of the alcohol industry in the city of Dortmund, Germany.
Dortmund is the third-largest city in North Rhine-Westphalia after Cologne and Düsseldorf, and the eighth-largest city of Germany, with a population of 588,250 inhabitants as of 2021, according to Wikipedia. There were 230 working days in Germany in 2021.
Overall economic harm due to alcohol
The costs of alcohol harm in Sweden amount to SEK 103 billion (ca. €10 billion), annually, according to a 2019 study. This system of ensuring alcohol sales are conducted with a public health focus, through a government-run alcohol retail monopoly that removes the profit interest from selling alcohol has ensured alcohol affordability and availability are low and consequently alcohol consumption remains relatively low in the country.
Still, the harm caused by the alcohol industry exerts significant health, social, and economic costs in Sweden.
Systembolaget, the government run alcohol retail monopoly in Sweden, commissioned Ramboll to calculate the socio-economic consequences of alcohol.
The study found:
- Police and prosecutors investigated 162,000 alcohol-related cases at a cost to society of nearly SEK 10 billion.
- Alcohol causes a loss of productivity equivalent to SEK 35 billion.
- Alcohol amounts to over SEK 40 billion in impaired quality of life.
Alcohol costs to the Swedish healthcare system
Analysis by Ramboll shows that the total cost of alcohol-related health and medical care in Sweden amounts to almost SEK 4.2 billion (approx. US$ 488 million) annually. These costs do not include primary care or substance use disorder care in the social services.
Men are at the highest risk, accounting for 70% of alcohol-related health and medical care, specifically those in the age group above 35 years.
Specific healthcare costs due to alcohol
- Injuries and poisoning caused by alcohol is the category with the highest healthcare costs at SEK 1.71 billion.
- Care and treatment for mental health and behavioral disorders caused by alcohol costs Sweden just over SEK 1 billion.
- Healthcare costs of cancer caused by alcohol amount to SEK 381 million.
- For cardiovascular disease healthcare costs are SEK 469 million.
These findings demonstrate the importance of prevention interventions and population-level alcohol policy solutions to protect and improve public health, and avoid high costs for treatment of conditions that are preventable.
Alcohol major risk factor for public diseases in Sweden
Both physical and mental public diseases have a large impact on Swedish people and society as they disrupt life and work and lead to higher healthcare needs. Alcohol is a major risk factor for some of the Swedish public diseases with the highest impact, such as diseases of the heart and blood vessels, diabetes and mental illness.
It is estimated that 5% of the disease burden in Sweden is caused by alcohol. For teenagers between 15 to 19 years alcohol causes the biggest disease burden.
Costs of alcohol violence
A 2020 report from Systembolaget illustrated the massive costs from alcohol violence, crime and other harms. These costs burden not only public health and the economy but also the social fabric as people’s sense of safety and freedom is affected by alcohol’s second hand harms.
In 2017, figures show, alcohol-related crime cost Swedish society almost €1 billion. The cost includes the police, trials, investigations and prison care, where the largest proportion is about assault cases. The report states that in violent crimes, the perpetrator was under the influence of alcohol in 57% of the cases, while 31% of the victims had been under the influence of alcohol before the crime was committed.
Inserm, the French public research organization dedicated to health, released a collective expert opinion on the alcohol problem in France on June 4, 2021.
Mortality attributable to alcohol is higher in France than elsewhere in Europe,” recalls the report by Inserm, as per Le Monde.Inserm
The report first presents current statistics about the French alcohol problem.
- 41,000 French people died due to alcohol in 2015. This amounts to 7% alcohol-related mortality out of the 580,000 total deaths in that year, making alcohol the second largest cause of preventable death.
- Out of the 41,000 alcohol deaths,
- 16,000 deaths were due to cancer,
- 9,900 deaths were due to cardiovascular disease,
- 6800 deaths were due to digestive diseases,
- 5400 deaths were due to external causes such as accidents or injury, and
- 3000 deaths were due to another disease including mental health issues and behavioral disorders.
- The French government suffers a €3 billion deficit when health and prevention costs of alcohol are set against the tax collected from alcohol products.
Alcohol remains the second largest cause of preventable death in France behind tobacco.
It caused 7% or 41,000 of the total 580,000 deaths in France in 2015.
The harm caused by the alcohol industry in the Netherlands burdens society with €2.3 to €2.9 billion every year, according to findings from the National Institute for Public Health and the Environment (RIVM).
Alcohol harms and costs
Major contributions to the staggering sum of societal costs come from
- Loss work productivity,
- Premature deaths,
- Traffic accidents,
- Costs to the police and justice system costs,
- Health care costs
- Reduced quality of life due to alcohol related diseases
- School drop-outs and the negative consequences.
Workplace harm due to alcohol in New Zealand
A 2019 study showed that in New Zealand, the estimated annual average cost of lost productivity per employee was NZ$1097.71 (NZ$209.62 absenteeism, NZ$888.09 presenteeism) and NZ$134.62 per employer.
At a population level this equates to approximately NZ$1.65 billion per year.
Workplace harm due to alcohol in the United Kingdom
A 2019 report by the Institute of Alcohol Studies (IAS) reported that in the UK, as many as 89,000 people may be turning up to work hungover or under the influence of alcohol every day.
The survey of 3,400 British workers found:
- 42% had ever been to work hungover or intoxicated, and 9% had done so in the past six months.
- 36% suspected that one or more of their colleagues had been hungover or intoxicated in the last six months, reporting reduced productivity, greater stress and a negative effect on team morale.
- Respondents believed themselves to be 39% on average less effective when they were intoxicated or hungover.
According to the findings, the UK government may be underestimating the cost of alcohol to the British economy by almost 20%. The government’s official analysis excludes the impact of working intoxicated or hungover due to a lack of robust data on the issue.
The new IAS figures suggest that the government’s estimate of the economic costs of alcohol should rise from £7.3 billion to £8.7 billion.
Examples of economic damage due to alcohol in low- and middle-income countries
A 2018 study estimated present value of current and future economic cost due to alcohol harm for Sri Lanka in 2015 was US$885.86 million, 1.07% of the GDP of that year.
The direct cost of alcohol related disease conditions was US$ 388.35 million, which was 44% of the total cost.
The indirect cost was US$ 497.50 million, which was 66% of the total cost. Road Injury cost was the highest cost category among the conditions studied.
Alcohol causes significant negative health impact and economic burden on Indian society and evidence informed policy interventions are needed to prevent and reduce alcohol harm.
A 2019 study reported that the burden of alcohol in India cost the economy more than what the government spends on health.
The study has found that after adjusting for tax receipts from alcohol sale, the economic loss from adverse effects of alcohol consumption would reach about 1.45% of the gross domestic product (GDP). For comparison, the Indian government’s annual expenditure on health is only about 1.1% of the GDP.
The societal cost of Alcohol Use Disorder
A 2020 study put a price tag on alcohol use disorder (AUD) by estimating the costs of different risk factors for AUD.
Evaluating the costs linked to AUDs, scientists show that sustained abstinence reduces the costs of care, recommending to develop rehabilitation services and provide easy access to care, including comprehensive support for their non-alcohol related conditions that people with alcohol use disorders often are experiencing.
- The number of diagnoses of chronic conditions played the biggest role in the overall cumulation of costs in patients with AUD.
- In patients with at least two chronic conditions, the average 5-year costs of care were €26,000 (around US$ 30,000) higher than in patients without multiple diagnoses.
- The costs of care increased by earlier use of specialized care (and its high costs), receiving income support, and being over 55 years old.
- Other drug use, homelessness and the number of psychiatric diagnoses also increased the costs of care.
- Sustained abstinence lowered the costs.
- A model created by the researchers shows that roughly 43% of alcohol use disorder patients who quit alcohol use belong to the lowest cost quartile, compared with the respective figure of 24% for current alcohol users.