Weighing the pounds

Think tank: Social Market Foundation

Author(s): Aveek Bhattacharya

February 9, 2024

This report from UK think tank the Social Market Foundation looks at the economics of public health intervention.

This Social Market Foundation briefing is the third of three papers exploring tobacco, alcohol, obesity and gambling policy. It argues that the contribution of such activities to the economy should not be used as a justification to avoid action to discourage them, whereas the costs they generate through ill health are more significant – though they should not be overstated.

Economic arguments are often used to resist public health measures, and increasingly to promote them, though they often confuse quite different types of costs and benefits. While many interventions involve lower sales of unhealthy commodities, it is important to remember that a loss of spending in one particular sector will be at least partly offset by higher spending in others. We need to look at the specific characteristics of different industries to understand the trade-offs involved in shifting activity between them.

The economic costs associated with health harms, unlike the costs to particular industries, are a pure loss to the economy, not offset by gains elsewhere. Improving health outcomes should reduce working-age deaths, decrease economic inactivity and sickness absence and improve efficiency, leading to a bigger and more productive workforce. Yet these gains should not be overstated – the cost of these issues to the economy is likely in the tens of billions, which means addressing them is only likely to boost growth by a fraction of a percentage point a year.