The Cost of Cost Studies

Type of content
Discussion / Working Papers
Publisher's DOI/URI
Thesis discipline
Degree name
College of Business and Economics
University of Canterbury. Department of Economics and Finance
Journal Title
Journal ISSN
Volume Title
Crampton, E.
Burgess, M.
Taylor, B.

We review methods and assess the policy influence of a series of publicly-funded Cost of Illness studies, mostly published since 1990. Our analysis shows that headline cost estimates, including the influential paper by Collins and Lapsley (2008), depend on an incorrect procedure for incorporating real world imperfections in consumer information and rationality, producing a substantial over-estimate of costs. Other errors further inflate these estimates, resulting in headline costs that are unrelated to either total economic welfare or GDP and therefore of no policy relevance. Counting only external, policy-relevant costs not only deflates overall figures substantially but also results in rank order changes among cost categories. Despite this, Cost of Illness studies appear effective in mobilizing public opinion towards increased regulation and taxation that is not justified by an expected increase in economic welfare: this is the cost of cost studies.

RePEc Working Paper series: No. 29/2011
Crampton, E., Burgess, M., Taylor, B. (2011) The Cost of Cost Studies. Department of Economics and Finance. 52pp..
costs and benefits of alcohol usage, alcohol policy, Australia, New Zealand, adequacy of consultancy reports
Ngā upoko tukutuku/Māori subject headings
ANZSRC fields of research
Fields of Research::38 - Economics::3801 - Applied economics::380119 - Welfare economics