Time lags associated with policies to reduce substance abuse

5 Time lags associated with policies to reduce substance abuse

Before estimating avoidable proportions it is necessary to specify the time period for which the estimates are to be made. Abuse costs are considered to be avoidable as a result of the application of appropriate anti-abuse policies and programmes. However, some of the identified costs of abuse, while in theory avoidable, may be reduced or eliminated only over long lead times, of which there are three categories:

1. There will be policy implementation lead times, since policies cannot be instantly, designed, legislated and implemented;

2. Even after full and effective implementation there may well be long lead times before the health or other effects of the policies are fully felt;

3. As some abuse costs result from premature mortality, if the prevalence of substance abuse is reduced it will be years before the population structure fully

reflects the reduction in premature mortality. In general, the longer the period of analysis over which the estimates are undertaken, the

higher will be the proportion of costs which will be avoidable, although there will certainly be a time period beyond which no further cost reductions are possible. In addition, lead times are likely to differ according to the type of cost under consideration. Taking the example of tobacco, a decline in smoking prevalence may lead to a virtually instant decline in some costs, for example those arising from fire-related deaths, injuries, damage and litter. On the other hand, other types of costs may only be responsive to declines in smoking prevalence with a considerable lag. For instance, reduced smoking prevalence may lead to a decline in lung cancer-related costs only after a period of many years, and the costs of alcohol-attributable road accidents may be borne for many years after the accidents themselves. Acute conditions will generally have shorter lead times, while for chronic conditions the lead times will be much longer.

Researchers will have to make the decision as to whether avoidable proportions should be calculated for a given point in time for a period of time sufficiently long for minimum levels of substance abuse costs to be achieved. It may be possible to produce a time profile of the increase in the proportion of costs which would be avoidable.

In principle, estimates should be made of the lags involved in addressing each type of cost (for example, in relation to health costs, each medical condition). If this is not possible, then an estimate should be made for the average lag time involved in reducing substance abuse. Even this more general approach may, in practice, be impossible to implement. At times, it may be necessary for researchers to make an educated guess as to the range of values in which the actual average lag may lie and to test the sensitivity of the results to the adoption of different lags.

In utilizing avoidable cost estimates in cost-benefit analysis, it will inevitably be necessary to discount the time stream of benefits (that is, reduction in substance abuse costs) to some base year. All other things being equal, the longer the assumed lag the In utilizing avoidable cost estimates in cost-benefit analysis, it will inevitably be necessary to discount the time stream of benefits (that is, reduction in substance abuse costs) to some base year. All other things being equal, the longer the assumed lag the

The principles involved in consolidating a stream of costs or benefits over time through discounting are discussed in the original Guidelines. However, because avoidable costs change over time more than in the standard counterfactual scenario (see Chapter 3), it is necessary here to consider discounting further.

It should be noted that discounting involves adding up the stream of costs or benefits, giving a lower weight to those which occur further in the future. The stream is capitalised into a lump sum called the net present value (NPV). Comparisons between the NPV of the benefit and cost streams indicate whether a project is worthwhile. Note, however, that social costs of substance abuse are usually presented as the annual (net) cost, which is assumed to be broadly the same each year. They could be converted to an NPV, but that is not necessary because the streams do not change much through time. This means that an avoidable cost estimate based on an NPV is not comparable to the standard annual cost figure. To make them comparable, the NPV should be multiplied by the discount rate to convert the capitalised sum into the (weighted) average cost or benefit stream that the NPV generates.