Socio Economic Impact of Gambling in Context

Brad R. HumphreysUniversity of Alberta

Department of Economics

SEIG Studies …

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?”

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

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

Examples of Social Accounts

• Canada: National Income and Expenditure Accounts

• US: National Income and Product Accounts• UK: National Income, Expenditure and

Product Accounts

Systems vs. Results

System• Arithmetic • Nat. Product Account

Example of Result• 2+2=4• GDP

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

The Development of Social Accounts

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

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

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

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”

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

Social Accounting Systems

SEIG

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

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