IDEAS home Printed from https://ideas.repec.org/a/bbl/journl/v27y2024i4p54-72.html
   My bibliography  Save this article

A policy-oriented framework for social cost analysis of gambling: Evidence from the Czech Republic

Author

Listed:
  • Jakub Zofcak

    (Jan Evangelista Purkyne University in Usti nad Labem)

  • Dominik Stroukal

    (Metropolitan University Prague)

  • Josef Sima

    (Metropolitan University Prague)

Abstract

This paper introduces a new framework for calculating the social costs of gambling, distinguishing between private costs, externalities, and public expenditures. By focusing only on externalities and public expenditures, which are relevant to policy-making, this approach aligns with economic theory and allows for a more targeted political response. The practical application of this framework is demonstrated by calculating the social cost of gambling in the Czech Republic in 2022 using the best available data. Our findings estimate private costs to be between CZK 91.1–102.3 billion (Lie/bet scale) or CZK 89.3–105.0 billion (PGSI scale), externalities between CZK 2.6–4.8 billion or CZK 2.2–5.3 billion, and public expenditures between CZK 5.6–8.0 billion or CZK 9.6–12.1 billion (exchange rate 1 EUR = 24.48 CZK). However, quality of the calculation is heavily dependent on the quality of data and in our case serves as a practical application of the new framework. Private costs thus make the most of the total costs, but the externalities and the public expenditures are not negligible. The framework’s novel approach addresses long-standing flaws in the traditional calculations of gambling’s social costs. It proposes a division of total impacts into three distinct categories, allowing for a methodological unification and introducing rationality to political decision-making concerning gambling. By isolating externalities, private and public expenditures, this paper pioneers a pragmatic economic approach to policy intervention aimed at mitigating the social harm of gambling not reflected in its market price. Future research should incorporate this framework into regulatory impact assessments for gambling policies, which could significantly improve their quality. The study’s main limitation is the lack of Czech-specific and overall better-fitted data, especially on the psychological effects of gambling. Future research should improve data collection and consider not only the costs but also benefits of gambling to help to produce more comprehensive policy assessments.

Suggested Citation

  • Jakub Zofcak & Dominik Stroukal & Josef Sima, 2024. "A policy-oriented framework for social cost analysis of gambling: Evidence from the Czech Republic," E&M Economics and Management, Technical University of Liberec, Faculty of Economics, vol. 27(4), pages 54-72, December.
  • Handle: RePEc:bbl:journl:v:27:y:2024:i:4:p:54-72
    DOI: 10.15240/tul/001/2024-5-019
    as

    Download full text from publisher

    File URL: https://doi.org/10.15240/tul/001/2024-5-019
    Download Restriction: no

    File URL: https://libkey.io/10.15240/tul/001/2024-5-019?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Gallaway, Terrel & Olsen, Reed N. & Mitchell, David M., 2010. "The economics of global light pollution," Ecological Economics, Elsevier, vol. 69(3), pages 658-665, January.
    2. Douglas M. Walker, 2007. "Problems in Quantifying the Social Costs and Benefits of Gambling," American Journal of Economics and Sociology, Wiley Blackwell, vol. 66(3), pages 609-645, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Karl Geisler & Mark Nichols, 2016. "Riverboat casino gambling impacts on employment and income in host and surrounding counties," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(1), pages 101-123, January.
    2. Kienast, Felix & Frick, Jacqueline & van Strien, Maarten J. & Hunziker, Marcel, 2015. "The Swiss Landscape Monitoring Program – A comprehensive indicator set to measure landscape change," Ecological Modelling, Elsevier, vol. 295(C), pages 136-150.
    3. Elena Raptou & Konstadinos Mattas & Constantinos Katrakilidis, 2009. "Investigating Smoker's Profile: The Role of Psychosocial Characteristics and the Effectiveness of Tobacco Policy Tools," American Journal of Economics and Sociology, Wiley Blackwell, vol. 68(2), pages 603-638, April.
    4. Wu, Shou-Tsung & Chen, Yeong-Shyang, 2015. "The social, economic, and environmental impacts of casino gambling on the residents of Macau and Singapore," Tourism Management, Elsevier, vol. 48(C), pages 285-298.
    5. Tran Quang, Tuyen, 2014. "Determinants of nonfarm participation among ethnic minorities in the Northwest Mountains, Vietnam," MPRA Paper 59158, University Library of Munich, Germany, revised 08 Oct 2014.
    6. Salvador Bará & Raul C. Lima & Jaime Zamorano, 2019. "Monitoring Long-Term Trends in the Anthropogenic Night Sky Brightness," Sustainability, MDPI, vol. 11(11), pages 1-14, May.
    7. Alessandro Gandolfo & Valeria De Bonis, 2014. "Motivations for gambling and the choice between skill and luck gambling products: an exploratory study," Discussion Papers 2014/185, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    8. Quang Tran, Tuyen & Hong Nguyen, Son & Van Vu, Huong & Quoc Nguyen, Viet, 2014. "Determinants of poverty among ethnic minorities in the Northwest region, Vietnam," MPRA Paper 59144, University Library of Munich, Germany, revised 01 Oct 2014.
    9. Amir Borges Ferreira Neto & Collin D. Hodges & Hyunwoong Pyun, 2016. "Voting Dynamics and the Birth of State-owned Casinos in Kansas," Economics Bulletin, AccessEcon, vol. 36(1), pages 329-336.
    10. Annika K. Jägerbrand, 2020. "Synergies and Trade-Offs Between Sustainable Development and Energy Performance of Exterior Lighting," Energies, MDPI, vol. 13(9), pages 1-27, May.
    11. Annunziata de Felice & Isabella Martucci, 2017. "Gambling as a Restraint to the Italian Economy," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 7(1), pages 1-5.
    12. Jiayi Li & Yongming Xu & Weiping Cui & Meng Ji & Boyang Su & Yuyang Wu & Jing Wang, 2020. "Investigation of Nighttime Light Pollution in Nanjing, China by Mapping Illuminance from Field Observations and Luojia 1-01 Imagery," Sustainability, MDPI, vol. 12(2), pages 1-18, January.
    13. Orazi, Davide C. & Lei, Jing & Bove, Liliana L., 2015. "The nature and framing of gambling consequences in advertising," Journal of Business Research, Elsevier, vol. 68(10), pages 2049-2056.
    14. Anna Beniermann & Martin Glos & Heike Schumacher & Ingo Fietze & Stephan Völker & Annette Upmeier zu Belzen, 2023. "‘Sleep Blindness’ in Science Education: How Sleep Health Literacy Can Serve as a Link between Health Education and Education for Sustainable Development," Sustainability, MDPI, vol. 15(16), pages 1-22, August.
    15. Brad R. Humphreys & Brian P. Soebbing, 2014. "Access to Legal Gambling and the Incidence of Crime: Evidence from Alberta," Growth and Change, Wiley Blackwell, vol. 45(1), pages 98-120, March.
    16. Krzysztof Skarżyński & Anna Rutkowska, 2023. "The Interplay between Parameters of Light Pollution and Energy Efficiency for Outdoor Amenity Lighting," Energies, MDPI, vol. 16(8), pages 1-14, April.
    17. Alina Svechkina & Tamar Trop & Boris A. Portnov, 2020. "How Much Lighting is Required to Feel Safe When Walking Through the Streets at Night?," Sustainability, MDPI, vol. 12(8), pages 1-19, April.
    18. Krzysztof Skarżyński & Wojciech Żagan, 2022. "Quantitative Assessment of Architectural Lighting Designs," Sustainability, MDPI, vol. 14(7), pages 1-23, March.
    19. Steinkraus, Arne, 2016. "Investigating the carbon leakage effect on the environmental Kuznets curve using luminosity data," Economics Department Working Paper Series 15, Technische Universität Braunschweig, Economics Department.
    20. Domenico Campisi & Simone Gitto & Donato Morea, 2017. "Light Emitting Diodes Technology in Public Light System of the Municipality of Rome: An Economic and Financial Analysis," International Journal of Energy Economics and Policy, Econjournals, vol. 7(1), pages 200-208.

    More about this item

    Keywords

    Gambling economics; social cost analysis; public policy impact; externalities; regulatory impact assessment;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bbl:journl:v:27:y:2024:i:4:p:54-72. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Vendula Pospisilova (email available below). General contact details of provider: https://edirc.repec.org/data/hflibcz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.