Pathological Gambling A Critical Review (1999) / Chapter Skim
Currently Skimming:
5: Social and Economic Effects
5: Social and Economic Effects
Pages 156-191
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 156... ...
There is no question that legalized gambling has brought economic benefits to some communities; just as there is no question that problem gambling has imposed economic and social costs. The important question, from a public policy perspective, is which is larger and by how much.
|
From page 157... ...
This is especially true for intangible social costs, such as emotional pain and other losses experienced by family members of a pathological gambler, and the productivity losses of employees who are pathological or problem gamblers. Beneficial effects can also be difficult to measure and, as with costs, can vary in type and magnitude across time and gambling venues, as well as type of gambling (e.g., lotteries, landbased casinos, riverboat casinos, bingo, pari-mutuel gambling, offtrack betting, sports betting)
|
From page 158... ...
Discussions of the costs to the individual of pathological gambling would be circular if we claimed to "discover" these consequences. Instead, we focus on the magnitude and the extent to which pathological gamblers experience these adverse consequences.
|
From page 159... ...
found that children of pathological gamblers frequently reported feelings of anger, sadness, and depression. Bland and colleagues (1993)
|
From page 160... ...
Several descriptive studies have reported widely ranging estimates of the proportion of pathological gamblers who commit offenses and serve prison terms for such offenses as fraud, stealing, embezzlement, forgery, robbery, and blackmail (Bergh and Kuh~horn, 1994; Blaszczynsi and McConaghy, 1994a, 1994b; Lesieur and Anderson, 1995; Schwarz and Linder, 1992; Thompson et al., 1996a, 1996b)
|
From page 161... ...
(1994) found that 28 percent of the 60 pathological gamblers attending Gamblers Anonymous either reported that they had filed for bankruptcy or reported debts of $75,000 to $150,000.
|
From page 162... ...
ISSUES AND CHALLENGES IN BENEFIT-COST ANALYSES OF GAMBLING A wide variety of economic techniques is available to assess the effects of new or expanded gambling activities. What seems to be a straightforward task of identifying benefits and costs associated with legalized gambling and with pathological and problem gambling is really more difficult than it first appears.
|
From page 163... ...
To the extent that the money comes from recreational gamblers who live in other communities, such money represents a real benefit to the casino and the community in which the gambling occurred. However, some of the money spent in the casino by local residents is not an economic benefit, but merely a transfer within the community.
|
From page 164... ...
McMillen (1991) , for example, provides an excellent discussion of some of the challenges associated with the identification and valuation of benefits and costs associated with casino gambling in Australia.
|
From page 165... ...
The direct effect of a casino, for example, is the income and employment associated with providing goods and services to its patrons the wages casino employees earn are direct effects of the casino. Indirect effects refer to the secondary effects that casinos have on the community.
|
From page 166... ...
If direct effects have not been measured properly, then those measurement errors will carry over to the estimate of indirect effects as well. Tangible and Intangible Effects Both the direct and the indirect effects mentioned above are tangible, because they result in measurably more jobs and additional income being generated in the local economy.
|
From page 167... ...
There remain intangible costs and benefits that still defy measurement. Defining the Pram e of Reference A central issue critical to all economic impact studies is the frame of reference for the analysis (McMillen, 1991~.
|
From page 168... ...
It seems possible, even likely, that this assumption will bias the overall estimate upward. Notwithstanding the fact that some pathological gamblers seek treatment even while winning, it can be argued that those who seek treatment generally are worse off financially and therefore have amassed larger debts than those not in treatment.
|
From page 169... ...
The second problem is that this indebtedness estimate is the total debt that pathological gamblers incur rather than the incremental or additional debt incurred by such gamblers relative to the rest of the population. Even if the $500 million estimate indeed is a sound estimate of the total, it is not the right number to use in the analysis.
|
From page 170... ...
Second, a control group of people who are not pathological gamblers but who have similar demographic characteristics must be identified, and similar costs estimated for the control group to assist in the determination of the incremental or additional cost introduced by pathological gambling. Without this control group and the associated estimate of their costs, the estimated costs for the pathological gamblers represent the gross attributes of the pathological gambler population, rather than the incremental effect of pathological gambling.
|
From page 171... ...
ASSESSMENT OF STUDIES MEASURING THE COSTS AND BENEFITS OF GAMBLING Although there are studies that purport to investigate the economic effects of gambling, few show the careful, thorough efforts that are needed to estimate the actual net effects of gambling on society, and therefore few have made a real contribution to understanding these issues (e.g., Ricardo, 1998~. In general, economic impact studies fall into three groups.
|
From page 172... ...
A slightly more sophisticated form of gross impact analysis involves the use of input-output analysis to capture both the direct and the indirect effects associated with gambling. The first step involved in capturing direct and indirect effects is to measure the final demand for the gambling industry.
|
From page 173... ...
The emphasis in these studies tends to be on simple identification of benefits and costs associated with gambling, with limited emphasis on estimating their value (Aasved and Laundergan, 1993; Aasved, 1995; Stokowski, 1996~. When an attempt is made to discuss economic effects, especially the social costs associated with problem gambling, the estimates are taken directly from other studies, without any independent analysis or attempts to Viewings et al.
|
From page 174... ...
Chicago Study This study assessed the effects that additional pathological gamblers would have on Chicago with the introduction of casino gambling. Whenever possible, the authors assigned monetary values; when they could not, they at least discussed the costs that they could not quantify.
|
From page 175... ...
They define externality costs as criminal justice system costs, social service costs, and costs due to lost productivity. In order to estimate the per capita social costs due to pathological gambling, they relied on the annual cost estimates per pathological gambler and prevalence rates for pathological gambling computed in earlier studies (Goodman, 1994; Lorenz et al., 1990; Politzer et al., 1981~.
|
From page 176... ...
Madden does not specifically consider the costs of pathological and problem gambling but does analyze trends in factors that often are cited as being affected by such gambling, including the number of recipients of Aid to Families with Dependent Children, the number of families receiving food stamps, the number of child abuse and neglect cases, the number of child support cases, the number of divorce filings, the percentage of property taxes that are not collected, the number of bankruptcy filings, the number of small claims filings, and the number of real estate foreclosures.~° He concluded that there does not appear to be any correlation between the increased availability of gambling and these socioeconomic indicators. This study raises another potentially difficult problem with gambling studies.
|
From page 177... ...
Florida Study A Florida study of the effects of casino gambling represents an improvement in the identification and estimation of the benefits and costs of pathological and problem gambling (Florida Office of Planning and Budgeting, 1994~. Its derivation of the net positive benefits considered the direct and indirect effects that casinos will have on the state economy, carefully considering expenditure substitution and leakage to ensure that the focus is on additional spending associated with the casino and not some measure of gross economic activity.
|
From page 178... ...
Taken together, the per pathological gambler cost estimate and the three prevalence estimates enabled the analysts to provide a range of costs attributable to pathological gamblers if casinos were approved in Florida. Unfortunately, the study was based on several key but untested assumptions that may have had the effect of overestimating costs associated with pathological and problem gambling and minimizing the benefits of casino gambling.
|
From page 179... ...
, are not included · prevalence was estimated either from the survey results or, where more appropriate, from the clinical databases available · responses to survey questions were grouped and directly linked to impacts where appropriate · the team's professional judgment was used to decide whether the survey results or incidence from clinical databases were used as the basis for coatings iiThe reason for a lack of precision regarding whether this indeed is the first study of its type is attributable to information provided in another study, Study Concerning the Effects of Legalized Gambling on the Citizens of the State of Connecticut (report prepared for the Division of Special Revenue, Department of Revenue Services, State of Connecticut, June 1997~. This study refers to five noteworthy studies that have been conducted in this area: a 1994 study in Quebec, a 1995 study in Germany, a 1995 study in Illinois, a 1995 study in Australia, and a 1996 study in Wisconsin.
|
From page 180... ...
A second factor associated with problem gambling in the study is legal costs. Legal costs were separated into court costs, estimated at an annual cost of A$5.6 million; prison costs, estimated at an annual cost of approximately A$9 million; and police costs, estimated at an annual cost of A$2.6 million.
|
From page 181... ...
This estimate is compared with the A$2.9 billion in net benefit introduced by gambling in New South Wales. The methodology used by the researchers to reach this estimate of net positive effect involved the use of input-output multipliers, carefully adjusted for substitution of expenditures and leakage.
|
From page 182... ...
To answer these questions, they used information from their survey as well as information provided by earlier research on the costs of problem gambling. They chose to focus on employment costs, bad debts and civil court costs, thefts and criminal justice system costs, therapy costs, and welfare costs.
|
From page 183... ...
In reality, it is likely that many problem gamblers will ultimately pay little of their debts. Annual criminal justice costs include a number of factors, including bankruptcy court costs, estimated at $330 for all gamblers and $510 for casino gamblers; the cost of civil cases, estimated at $510 for all gamblers and $530 for casino gamblers; the cost of criminal cases, estimated at $370 for all gamblers and $510 for casino gamblers; the cost of probation, estimated at $190 for all gamblers and $190 for casino gamblers; the cost of imprisonment, estimated at $1,160 for all gamblers and $760 for casino gamblers; and the cost of arrests, estimated at $50 for all gamblers and $40 for casino gamblers.
|
From page 184... ...
Nevertheless, this study is an important improvement over many preViOUS ones. The researchers compare their estimates of the annual total social costs for the state of Wisconsin due to problem gambling $307 million for all gamblers including $138 million for casino gamblers to estimates of the net positive effects of gambling activities estimated in an earlier study (Thompson et al., 1995~.
|
From page 185... ...
A very few studies have recently made large strides over the contributions of earlier studies, which generally focused only on the positive economic benefits or provided descriptions of the cost factors associated with pathological and problem gambling, but did not attempt to estimate the costs of gambling, much less the costs of pathological and problem gambling. Still, benefitcost analysis of pathological and problem gambling remains undeveloped.
|
From page 186... ...
Another unexplored issue is to what degree the findings on the economic impact of casino gambling apply to other forms of gambling. As this chapter indicates, most of the research deals with casinos.
|
From page 187... ...
Journal of Gambling Studies 10~2~:129-145. 1994b Criminal offenses in Gamblers Anonymous and hospital treated pathological gamblers.
|
From page 188... ...
:217-247. Florida Office of Planning and Budgeting 1994 The Anticipated Impact of Casino Gambling in Florida.
|
From page 189... ...
Okuyama 1998 The Impact of Riverboat Casino Gambling on the Illinois Economy 1995. Report prepared for the Illinois Gaming Board.
|
From page 190... ...
Fabian 1992 Delinquency among pathological gamblers: A causal approach. Journal of Gambling Studies 8~1~:61-77.
|
From page 191... ...
Schwarz, J., and A Lindner 1992 Inpatient treatment of male pathological gamblers in Germany.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.