Australia's Gambling Industries - Productivity Commission

• 336 people receiving a jail sentence as a result of their problem gambling per
year;
• an average sentence of 3.4 months; and
• an average annual cost per prisoner of $52 983;
the cost of prison terms relating to problem gambling is estimated to be $5.1 million
each year.
Personal and family costs
Personal and family costs are amongst the hardest and most contentious to value
against. Nonetheless, this is not a valid reason to avoid attempting to do so.
Estimates, even those involving considerable judgment, can provide us with some
idea of the extent of the cost involved. Leaving them out means that much of the,
arguably more important, costs are ignored and an incorrect impression is given that
the costs are minimal because they are not estimated. Not including such estimates,
which in effect values the cost at zero is likely to involve greater error, even if there
is a degree of uncertainty surrounding the estimate.
Measurement of these intangibles has concentrated on attempt to quantify the value
of life. Typically they have been undertaken to estimate the costs and benefits of
certain actions that will save or extend life. The two basic approaches to the
valuation of life are the ‘human capital’ and the willingness to pay’ techniques,
Single et al (1996) said:
The human capital approach estimates the discounted current value of the future stream
of potential earnings of the victim. This approach undervalues life since it takes no
account of the value of life to the victims over and above their earnings loss. ... The
willingness to pay approach studies what people would be willing to pay for relatively
small changes in the risk of death and from these figures produces estimates of the
value of life. While this technique appears to have a much sounder theoretical basis,
there still remain considerable difficulties in the accuracy and consistency of estimates
using this approach.
These estimates can give values for the human life in the millions of dollars, but the
Commission is reluctant to use such estimates in this contentious area.
Consequently, more conservative values for a range of emotional costs associated
with problem gambling have been used in these estimates.
The personal and family costs associated with problem gambling are most
commonly manifested in psychological ways — such as depression — rather than as
a more easily identifiable physical harm. There is, nonetheless, some evidence of
impact on the physical aspects of quality of life. Problem gamblers and their family
J.22 GAMBLING