The Cost-Benefit Analysis of Gambling


The economic cost-benefit analysis of gambling has many questions. Some argue that gambling has positive and negative effects on people. Others say gambling is good for employment. Here are some basic questions to consider:

Impacts of gambling on people

There are many impacts of gambling, which can be classified into three broad categories: personal, interpersonal, and community. Economic and social costs include the revenue lost from gambling, impacts on other industries, and lowered productivity. Psychological and physical health are two of the most significant effects of gambling. Evaluating these impacts can help determine the most significant impact to a community. However, there is no single definitive way to evaluate these impacts, and there is still much room for debate.

Costs of gambling

The economic costs of gambling can be classified into two categories: direct and indirect. Direct costs are those directly related to the use of resources. Indirect costs, on the other hand, relate to the value of resources that are not created. For instance, time is a limited resource, and so the cost of lost time reflects the value of work performed. The costs of intangible resources are not directly related to the use of resources, and the PC noted that intangible costs cannot be quantified with existing market prices. Thus, this type of study is not satisfactory, because it implies that the value of quality of life is zero. Nonetheless, this methodology was developed by the Australian Productivity Commission in 1999. The report assumed that 80% of individuals experiencing problems with gambling would still suffer its consequences without engaging in the activity.

Positive impacts of gambling on employment

The gross impacts of gambling on the economy are often underestimated, and the results of such studies are not useful for policymakers. They focus on a single aspect of the economic impact of gambling, with little attention to costs or social benefits. Such studies are not comprehensive, as they fail to consider expenditure substitution, geographic scope, and differences in tangible and intangible effects. Further, gross impacts of gambling are not a good indicator of net employment gains or losses.

Economic cost-benefit analysis

When determining the social cost-benefit analysis of gambling, there are many factors to consider. For example, the economic benefits of gambling should be weighed against the cost of running a casino. While it is easy to quantify the economic benefits of gambling, social costs are often hard to measure, ranging from homelessness to financial hardship. These effects, however, should not be ignored as gambling can have many positive effects on society.

Pathological gambling

The Workgroup on the Diagnosis and Treatment of Pathological Gambling (DSM-IV) has recommended that the diagnostic cut-off score be reduced to four symptoms. Current diagnostic criteria require the endorsement of five of the 10 symptoms of pathological gambling. However, recent research suggests that four symptoms may be sufficient. In addition to lowering the diagnostic cut-off score, the Workgroup recommends reclassifying pathological gambling under the section on addictive disorders.