Socio Economic Impact of Gambling in Context

1. Socio Economic Impact of Gambling in Context Brad R. Humphreys University of Alberta Department of Economics

2. SEIG Studies …

3. The Need for SEIG Studies • Gambling is a widespread economic activity • Regulators and the public and need clear answers to important questions … • “What is the effect of gambling on our province?” • “How much gambling is the `right’ amount?”

4. SEIG and Social Accounting • SEIG studies are applications of social accounting • Decades of research have been devoted to the development of social accounts • Systems of social accounting solved many of the problems that plague SEIG studies decades ago

5. Principles of Social Accounting • Don’t count things more than once • Think carefully about placing activities in categories • You can’t measure everything • Many things that can be measured cannot be measured in a way that makes sense in the context of social accounting

6. Examples of Social Accounts • Canada: National Income and Expenditure Accounts • US: National Income and Product Accounts • UK: National Income, Expenditure and Product Accounts

7. Systems vs. Results System Example of Result 2+2=4 GDP • Arithmetic • Nat. Product Account

8. Uses of Social Accounts • Provide decision makers and the public with reliable information about economic activity • Generated by an internally consistent system, so users can have confidence that the numbers “mean” something • Forces us to recognize that not everything can be measured in the context of a social accounting system

9. The Development of Social Accounts

10. The Development of Social Accounts • The Great Depression showed that economic policy makers did not know what was going on in the economy – needed better information • After 20 years of research, social accounting systems began to emerge (e.g. NIPA) • Developed an internally consistent method for measuring economic activity • Note that social accounting systems did not simply utilize existing data

11. SEIG vs. Social Accounting • Existing SEIG frameworks • Developed without reference to social accounting methods, make no mention of these methods • Not currently based on internally consistent social accounting principals • Commit mistakes that well designed systems of social accounts avoid • Amount to laundry lists of the parts of society affected by gambling

12. Problems with SEIG • Fail to recognize that everything that can be measured cannot be measured in a way that generates a useful, consistent metric • Invite quantification of every item on the laundry list • Invite “psuedo cost benefit” analysis • Invite inappropriate comparison across studies

13. An Example • Anielski [“The Socio-Economic Impact of Gambling (SEIG) Framework” 2008] identifies “Government regulatory costs (government expenditures) related to gambling industry” “Provincial government public accounts”

14. Problems With This • Suggests that the AGLC budget can be used to determine the regulatory costs of gambling in the province • It cannot – agency budgets are unsuitable for estimating these costs • The operation of AGLC generates benefits for gamblers and non-gamblers in Alberta

15. Social Accounting Systems

16. SEIG

17. Good Things About SEIG • Some (good) information is better than no information [but bad information may not] • Comprehensive • Can inform us about many important relationships between gambling and society • Allows the reader to use personal judgment and values to determine the overall impact of gambling on society

18. Where Do We Go From Here? • Must recognize the flaws with existing SEIG frameworks – this has been pointed out before but ignored • Must recognize the tension between the questions that policy makers and the public want answered and the way academics do research • Need to determine if SEIG can be salvaged before doing any additional SEIG studies