The economic cost of irritable bowel syndrome and other conditions

I was watching – ok, sort of – the 7.30 Report last night and there was a segment based on an Access Economics Report on the economic cost of combined deafness and blindness.  It focused on a remarkable woman who had an inherited condition in which she had been born deaf and had become blind in her 20s.

All up, an interesting personal story.  But then we were told that there are some quarter of a million Australians with combined deafness and blindness, and this number would increase to one million (time frame not mentioned).  Mmmm, I thought, surely the numbers with the rare condition of the women shown in the program are very small.  So who are these quarter of a million?  And how old are they?  Are they completely deaf and blind? And how are these projections arrived out – looks like a suspiciously high number into the future.

I have had my suspicions of these studies for some time.  I went to the Access Economics website to discover that these sort of studies –

THE ECONOMIC COST AND IMPACT OF …….

are clearly a nice little earner for the group.

Some of the …. dealt with include:

  • Dementia
  • Hearing loss
  • Youth mental illness
  • Heart attack and chest pain
  • Spinal cord injury and traumatic brain injury
  • Otitis media

And the list goes on.

Adding up the estimated economic cost of all these conditions begins to exhaust the GDP, which suggests that the estimates of the economic costs are grossly exaggeraged for a number of reasons.  This should not come as any surprise of course since the sole purpose of these studies – they have no academic credibility – is to provide RHETORIC  to bolster the case for the RENT SEEKERS who are attempting to prize out additional taxpayer monies to support their particular activities, worthy though they may be.

One of the real problems with these studies is the double/triple/…  counting associated with these studies as many people have multiple pathologies.  Moreover, the projections of the numbers afflicted by these conditions in the future should be treated with a grain of salt (probably box).

These studies also conflict with the findings of the Productivity Commission in their work undertaken in relation to the National Reform Agenda. In large part because most people with chronic conditions manage to continue their working life, the PC’s estimates of the cost of most chronic conditions (including mental illness) are not especially high.

The interesting work of Eric Crampton at the Canterbury University – great paper delivered at the Mont Pelerin Society – also shows that government studies of the economic costs of alcohol use are grossly exaggerated. There are typically  both conceptual and measurement mistakes.

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38 Responses to The economic cost of irritable bowel syndrome and other conditions

  1. ken n

    Yes. Sad that Access Economics does this kind of stuff. Not in Geoff Carmody’s day…
    On the approach I think trying to calculate the economic cost of illnesses is useless and irrelevant. Perhaps someone believes that economic rationalists want this kind of thing.
    I have written and spoken about depression. When asked about economic cost I say whatever the cost is – and no one knows – it is irrelevant compared to the misery of the sufferers. That’s the reason we need to be concerned about it, not the economic cost.
    (Rant ends)

  2. conrad

    Perhaps a better question to ask rather than just complaining about rent seeking organizations doing there job is to look at what areas get too much and what areas get too little.

    For example, I’ll bet that IBS is completely underfunded compared to other areas like mental health, because it’s just something people don’t like to talk about, as was mental health two decades ago. Even within mental health, there are some areas that get huge amounts and other areas that get almost nothing, for no real reason apart from the success of different organizations at bending the government’s agenda.

  3. ken n

    Similarly, this stuff from the Australia Institute.
    Australian are incompetent in looking after their financial affairs.
    Therefore the government should (fill in the blank).

    By the way, I can’t find this on the AI website under media releases or anywhere else. My guess is that they have learned the spinners’ trick of giving the story to a friendly columnist before public release.

  4. Geoff Carmody

    Judith,
    Thank God!
    Adrian Pagan raised concerns about these some time ago.
    Henry Ergas (very gently) blew the whistle on another piece of rubbish done for Matthew Warren’s rent seekers last Friday (opinion, The Australian, 26 November).
    Some of those inheriting the company I set up are trashing its slowly built reputation for ‘good policy’ advocacy – and as a result, in my opinion, their own future livelihoods.
    Keep up the good work.
    All analysts should be exposed to thorough peer review.
    Best regards
    Geoff Carmody
    Co-founder, Access Economics

  5. ken n

    That’s the way the game works conrad.
    The mental health story is interesting. The suicide rate has been dropping steadily for about ten years here and in many other developed countries. (Yes, I know there is a lobby that says the figure are not correct but they are wrong).
    Something is working. Probably better treatment of mental illness – medication and the whole armory – coupled with the reduction in stigma so people are more likely to seek help.
    But I doubt that anything any government has done has contributed very much.

  6. Matt

    I saw that story as well and had the same thought about the figure of 1 million deaf and blind Australians. Around 1 in 25 Australians deaf and blind? Where are all these people?

    I suspect the figure is supposed to be 1 million Australians either deaf and/or blind but even this looks likes a large overestimate. Still, you don’t get funding for pointing out just how rare a condition is, do you?

  7. Alex Robson

    Excellent post, Judy, 100% spot on.

  8. Jacques Chester

    Perhaps we should pass around the hat and commission Access Economics to do a study on the economic cost and impact of rent-seeking.

  9. Jacques Chester

    By this stage I also imagine they have down to a routine. A spreadsheet template and a document template. Plug in a few numbers, voila, it costs $X billion per year. Here’s our report. That’ll be $5000, please.

  10. ken n

    Matt – probably includes all whose sight or hearing is not great. I’d be in both categories.
    Jacques – once upon a time they would have done it, probably without charge. These days I doubt it.

  11. .

    “By this stage I also imagine they have down to a routine.”

    Probably if they’ve done a lot of this before.

  12. TN

    Alas its not just Access Economics. Anything out of the Dept of Health will inflate the costs of … too.

    The stuff they commissioned on smoking had no benenfits and all costs (including cost of purchase) being social social costs, on the basis that addiction meant that the purchasers did not account for the expenses and other costs involved.

    Then there are the tourism industry stats, put out by the ABS in cohoots with the industry department, that count anyone travelling anywhere for anything (almost) as a tourist. So if you farmer travels from the station into the regional centre and buys a Commodore ute, that’s $30 000 of tourism!

    The NFF tried on a similar ruse a few years back, claiming that its share of GDP was not 3% but closer to 15%, IIRC, counting the downstream linkages (eg food manufacturing plants etc). If every industry did that, GDP would need to be about 5 times bigger to have enough to share around!

    Then of course there are all the estimates of the benefits of sporting events, from the Trangie Tiddliewinks to the Syndey Olypics – all grossly inflated.

  13. Milton Von Smith

    JC – add a 1 at the front and a zero at the end, and your statement would probably be closer to the truth

  14. .

    TN – I am shocked and appalled that travelling into town to buy a ute is called tourism, and that the tobacco purchase prices are externalised. This of course means as the purchase prices get higher (i.e growth increasing purchasing power or by consumption taxes), the distortions get bigger.

  15. Mark Harrison

    I call the Access reports ‘magic wand’ economics. At best they estimate what we would save if we could wave a magic wand and get rid of the disease. That is totally irrelevant for policy, which requires estimates of the marginal benefits and marginal costs of feasible policy interventions. For example, if we spent $20 million on policy X we would expect $30 million of benefits, therefore adopt policy X. Instead Access say ‘This disease causes billions of dollars of costs, therefore we should a lot of money combating it.’ But the issue is the likely benefits that result from that expenditure.

  16. Sid Vicious

    We could better fund those who are born with or develop a malady if we stopped:

    1. buying patrol boats for Indonesia and funding their refugee and asylum shopper program

    2. propping up PNG and various islands in our region

    3. throwing money at Africa

    4. funding things like Spain’s National Day as the Spanish-Australians ponce about in their national costume (and other groups)

    5. etc.

    How ’bout Access Economics having a look into the economic cost of such lunacy. I’m sure if we diverted money from some of the above we could buy a new mercedes benz for all those with a malady as well as take care of the medical needs.

  17. .

    PNG and other client States ought to be normalised as provinces within the Empire. We need them as a tax base and for military manpower, they need use for the military capital, stability, sound currency and investors.

    I’m deadly serious. At least I can admit we have client States.

  18. C.L.

    …client States ought to be normalised as provinces within the Empire.

    Fellow Aussies: nobody tell the Chinese.

  19. Judith Sloan

    When I lived in South Australia, I always wanted to do a study (ok, spoof) of the economic benefits of the pie cart in North Terrace. You know, the one that sold pie floaters (upside down meat pie lying in a plate of pea soup with tomato sauce – how many hats for that one, I wonder?). Just think of the external benefits – the tourist pull of the pie floater. And the multiplier effect of the wages paid to the staff serving up the pie floaters (yes, this is what these studies get up to.) The owner of the pie cart clearly needed government subsidies.

    But then the pie cart ceased to exist … oh. I think too many people had decided that pie floaters are absolutely disgusting.

  20. ken n

    Has it gone completely Judith?
    If so, Adelaide is off my list..

  21. Great post highlighting what I have seen all too often.

  22. .

    “…client States ought to be normalised as provinces within the Empire.

    Fellow Aussies: nobody tell the Chinese.”

    Are you saying we’re a client State or are you opposed to the Greater South Pacific Co-Prosperity Sphere?

  23. Infidel Tiger

    It’s Adelaide. The owner of the pie floater cart was probably murdered.

  24. ken n

    Yes IF I know the elites always ridiculed the pie cart but us ordinary Australians appreciated it.
    Typical of the way this country is going.

  25. JC

    Milt,

    was that comment directed to me or Jacques? Thanks

  26. Judith Sloan

    I’m pretty sure it has gone, outcompeted by 24/7 McDonalds in the CBD serving equally unappetising rubbish, but I don’t really care, it’s a free world.

  27. jtfsoon

    It’s Adelaide. Who knows what kind of meat was in the pie?

  28. C.L.

    Dot, your idea about sending New Guinean highlanders to Afghanistan for the ADF is Birdian in its brilliance. I also agree that we should start hitting up the islanders of Boigu for more tax revenue.

  29. FDB

    There’s nothing stopping you making your own pie floater.

    A workmate of mine has a signature dish for lunch occasionally – the Guy Floater. Upside down meat pie in a bowl with a microwaved can of extra-hot Stagg Chilli Beef ‘n’ Beans poured over it. A couple of slices of plastic cheese on top, et voila!

  30. .

    Pie, Lamb (served with green pea and mint soup)

    http://www.abc.net.au/tv/cookandchef/txt/s2011650.htm

    Sounds good.

    Maybe the national dish of the Greater Co Prosperity Sphere?

  31. Peter Patton

    It’s Adelaide. The owner of the pie floater cart was probably murdered.

    By a gay sadomasochistic Supreme Court judge.

  32. C.L.

    Unknown in Queensland. Eating a pie on a plate would be like declaring you’re a gay communist. I suppose South Australians use knives and forks like Mr Pitt with a Mars bar as well.

  33. Milton Von Smith

    JC – sorry, it was directed at Jacques

  34. .

    Look at Maggie Beer’s pie though. Gorgeous.

    As for being nancy boys, it happens in QLD, but at outrageously inflated prices:

    http://news.ninemsn.com.au/health/261049/want-a-cup-of-cats-poo-coffee-thatll-be-50

    Olio in St Leonards does $9 a cup.

  35. ken n

    Ah, nostalgia ain’t what it used to be.
    There was a pie card 5k out of Kingaroy. That put it beyond the local council’s jurisdiction. It was surrounded by bush but did good business.

  36. conrad

    “But I doubt that anything any government has done has contributed very much.”

    Actually, with mental health, the recent changes to stick clinical people onto the Medicare list probably has had some effect. The real problem is that it doesn’t hit the right groups enough, and a lot of it simply boosts the income of clinical people who simply charge over the rebate level because they can, rather than allow greater access. I think the society that controls it all is aware of this, and that the government might get cheesed off, and so it is at least thinking of ways to try and fix this.

    A more serious longer term problem is that mental health in Australia now gets very narrowly defined (basically issues to do with clinical psychology), and all the other areas are getting killed off. This means that if, for example, your kid has a serious reading problem (and hence behavioral problems because they’re bored at school), you’ll get essentially no help at all apart from a dodgy diagnosis from some clinical person who doesn’t know the faintest about learning problems and a certificate telling your kid’s school to give them some more time on exams. Ditto for things like marriage problems.

  37. pablo

    One serial offender in the future cost economics of their disease is Diabetes Australia. Like many others the press releases start rolling a few days before the ‘fill-in-the-blanks Week’. For DA they invariably include in their ‘economic costings’ all those people who don’t even know they have the disease. Now it might be fair enough to estimate this dimension in the case of undiagnosed diabetes, but it gets a bit self-serving for a body like DA to scare the shit out of everyone who might have one of the symptoms…like an ‘unusual thirst’.
    I’m not critical of diabetics – it is a serious condition – but as JS outlines for others it needs a bit of rigour applied to the industry around it. Maybe any body who run a campaign ‘week’ annually should have to submit an ‘audit’ to some panel. The ‘Australian Made’ certification comes to mind.

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