We’re all going to die. We’re not all going to die tomorrow, although these days it feels like the apocalypse is looming, but it will happen to all of us.
This rather uncomfortable fact often escapes some policymakers and public health experts.
They forget all lives, and indeed all deaths, have a fiscal cost, writes Jenesa Jeram.
I wrote the piece after reading a paper about the net costs of obesity by the Institute of Economic Affairs. I don’t know when it happened, but I’m now the kind of person who gets really excited about these things. This wasn’t just another Cost of Illness (CoI) study, it actually looked at NET costs. There aren’t enough studies like this. As my Herald op-ed notes (in excruciatingly little detail due to word count constraints), net costs matter because they are the closest indication of costs to the public purse. In contrast, a lot of CoI studies are pretty comprehensive (if not over zealous) in quantifying costs (including personal costs, social costs and fiscal costs)…but CoI studies aren’t as good at telling us any savings to the public purse associated with that disease*.
Here are a couple of things that propped up after I already filed the draft:
This Fairfax piece came out after I filed my piece, talking about ‘Smoking’s hidden costs’. It’s a very good example of what CoI studies can and can’t tell us:
- First, the Fairfax article cites a December 2015 paper by Treasury. I took me ages to find the paper because I assumed it would be tagged under smoking costs or something similar, but it’s here. The Treasury paper isn’t about smoking-related or smoking-attributable diseases specifically. It is about ‘The Employment and Income Effects of Eight Chronic and Acute Health Conditions’. What we don’t know from this study (and this isn’t a criticism of the study but the way it has been used) is the likelihood that a smoker will suffer that particular disease, combined with the likelihood that the disease will incur those costs/outcomes.
- A more substantive criticism, though, is the focus on productivity costs. Reductions in productivity aren’t direct costs to government. Businesses obviously suffer from reduced productivity. Individuals might also suffer as their reduced productivity leads to lower wages or fewer hours of work offered. Lower productivity might even have broader effects on the economy. But it’s not a fiscal cost. Besides, productivity costs are often calculated on the assumption that if it weren’t for illness, that person would be a perfect worker. But – and I don’t quite know how to put this without being offensive – there are a lot of lazy people in this world. There are a lot of people who have mastered Shirking 101, from napping at desks to browsing through Facebook. Governments who are serious about lost productivity should be investigating desk nappers and non-existent ‘close elderly relative’ funerals too. Or alternatively, governments could start by lifting overly burdensome that constrain private businesses in the first place.
- Finally, the Fairfax piece cites a study in Tobacco Control: ‘Global economic cost of smoking-attributable diseases’. As I mentioned in my op-ed, CoI studies like this are pretty good at combining a range of costs, some more credible than others, into one Big Scary Number. Not all of those are fiscal costs. Net costs are particularly important in global studies, where countries differ in their tobacco excise taxes and welfare/health system regimes.
- Takeaway point: The ominously titled ‘hidden costs of smoking’ article focuses mainly on productivity costs. Productivity costs aren’t fiscal costs. Nor is it very helpful to talk about the ‘global costs of smoking’ given the very different tax and welfare schemes in different countries. In countries like New Zealand with high tobacco excise taxes, it is widely acknowledged that smokers are already “paying their way“.
In contrast to what I think was a pretty deceptive article on the costs of smoking, Rob Stock has done a good job talking about the costs of obesity: ‘Financial reasons to declare your fridge a soft drink-free zone’. Some thoughts:
- Rob Stock was right to point out that there are costs borne by the individual that are related to obesity. This should be a compelling reason for individuals to consider the many ways consumption decisions can affect their lives. Unlike others, Stock resisted the temptation to conflate personal costs with fiscal costs or the need for government regulation.
- I’d note, however, that the Superu study that is referred to should be considered carefully. It’s a review of the international literature, as opposed to an estimate of costs in a New Zealand context. It’s likely some studies that are included in the review will be of a higher quality than others. I think it’s an interesting overview of the many different facets of life that obesity might affect, but it doesn’t give any weight (pun unintended) to the reliability of some studies over others.
- For now, I think eliminating soda is a bit of a red herring. There’s not enough convincing evidence to suggest cutting out soda will make much of a difference to one’s waistline and other life outcomes, when there’s a mountain of other unhealthy foods that could take its place. The main message should be about maintaining a healthy diet overall, not expecting miracles from skipping a Coke with your Happy Meal.
- Takeaway point: If costs are borne by the individual, it makes sense to appeal to the individual about how diet decisions can affect other facets of their lives. But when it comes to wide-ranging studies like the Superu one, keep in mind that some of the costs might be supported by stronger evidence than others.
*Inevitably there will be people who take issue with talking about “savings” to taxpayers when disease and early mortality are tragic in their own right. I think the conclusion to my op-ed still applies in this case: “Acknowledging that being fit and healthy might be costliest to taxpayers could be considered tasteless in some circles.But even more tasteless is stigmatising those already on the social margins by exaggerating the great burden they are imposing on others.”