The 5 most expensive addictions

By Forbes.com

Addictions are all the rage. Life experts popping up everywhere from group-speaking engagements to "The Oprah Winfrey Show" are extolling the dangers of overdoing activities from shopping and watching television to surfing the Web, drinking coffee and even daydreaming. Some even include excess complaining on the list.

"Everyone has some sort of (addiction), whether it's constantly checking your finances or just biting your nails," says Judith Miller, an author and speaker on the subject. "The problem is doing these things beyond their intended use, and they dominate your life."

Worrisome? Perhaps. But despite the hype, the overall economic effects of "soft addictions" pale in comparison with traditional "hard addictions" like drug abuse and alcoholism. While common sense says that those who spend work hours popping out to the store for a new pair of shoes or surfing the Web for personal use probably cost employers something in lost productivity, there's no definitive proof that employee "downtime" is any more prevalent than it was a generation ago, when telephone and water-cooler banter was in.

To be sure, there's plenty of anecdotal evidence to suggest that people can flirt with financial distress when overindulging in their favorite hobbies or escapes. Miller says the typical person she's met on her speaking and research travels spends $15,000 a year on his or her soft addictions, and that no one has ever spent less than $3,000.

Statistical evidence sparse

But there's precious little scientific quantification to enable economists to determine how much these problems really cost. Take sex addiction; it's good for headlines whenever it gets discussed, and it's considered a serious malady by the medical profession, but no formal cost studies exist.

Treatment-Center.net, an online service that compiles lists of treatment facilities around the country, estimated that the percentage of U.S. men addicted to pornography has grown to 20%, from 6%, in the past 10 years. That sounds plausible -- the Internet's been growing at an explosive rate during that time. But how much does this cost the economy? No one can say.

"We don't have government funds to carve out as much data for things like sex addictions, exercise and others," says John Fitzgerald of the Center for Addiction Management.

Some companies, such as New York tech advisory firm Basex and outplacement firm Challenger, Gray and Christmas, have tried to quantify the productivity costs of employees distracted by online activity, such as fantasy sports. But the methodology, which is simply to multiply average employee wages by an estimated number of minutes per day online, essentially treats people as robots who would normally spend every moment in full concentration mode.

That's never been the case. Why not look into how much productivity is supposedly lost by bathroom breaks or endless meetings?

The biggest problem, from an economic perspective, is that despite all these ills attacking the labor force, government statistics show that, thanks to technology, the average worker is twice as productive today as he or she was 40 years ago, meaning that an occasionally distracted employee is a small price for a business to pay for so much more output.

'Hard' addictions most costly

Meanwhile, studies compiled by various government health agencies show that the five most-chronicled "hard" addictions -- alcohol, drugs, tobacco, gambling and eating disorders -- are what society truly pays for. Those maladies cost taxpayers and businesses $590 billion annually, primarily in lost productivity and government-assisted medical treatment. That's about 5% of the national debt. And it doesn't count the sometimes bankrupting amounts of money those people personally spend on drugs, liquor, cigarettes or at the craps tables. Economically, those purchases are treated as pure transfer payments, no different than any other form of shopping.

The Substance Abuse and Mental Health Services Administration (SAMHSA) estimates that a combined $276 billion was spent or lost in 2005 on health care, lost productivity, premature death, auto accidents and crime relating to drug and alcohol abuse. Approximately three-quarters of that money came from public sources, it found.

About $18 billion of the tab went for treatment, even though fewer than 15% of the estimated 22 million Americans who engage in substance abuse actually seek treatment.

Early intervention recommended

"Many don't recognize they have a problem. Plus, there's the stigma," says Jack Stein, a SAMHSA director. He favors early intervention, including questioning of hospital patients by medical professionals who are qualified to detect an alcohol or drug problem.

Fitzgerald believes that standard inpatient treatment for a set period of time, or until an addict is "cured," is ineffective. He's found that with his patients, brief periodic follow-up visits make a big difference in keeping them sober.

"The real issue is keeping people connected with their treatment after their main rehab; it should be more about long-term management." he says.

Cigarette smoking, despite a shift in public attitudes over the years that's raised its social stigma, costs taxpayers $157 billion annually in medical expenses and lost productivity, according to the Centers for Disease Control and Prevention.

There are some outward signs that more people are kicking the habit. According to the Treasury Department, the 378 billion cigarettes officially sold in the United States last year represent a 21% drop from 1998, the year a group of state attorneys general secured a landmark settlement against the tobacco industry. The lawyers were quick to take credit for the sales decline in a statement this year, claiming that by "focusing attention on the conduct of tobacco companies and the dangers of cigarette smoking," they compelled more people to quit.

But given that the surgeon general's landmark warning on smoking came in 1964, it's doubtful that many people needed a reminder of cigarettes' health risks decades later. More likely, the sky-high taxes imposed by federal, state and local governments sent a good chunk of the business underground.

Meanwhile, eating disorders carry a $107 billion price tag, according to the National Institutes of Health. The estimated 39 million workdays lost to obesity-related problems cost businesses about $4 billion annually in lost productivity. And to think, some people criticized Wal-Mart Stores for considering a policy of attracting and retaining healthy employees.

Physical addictions aren't the only serious problems. Compulsive gambling, defined by the American Psychological Association as a mental health disorder of impulse control, accounts for $40 billion in annual losses from counseling, productivity declines and social services, according to an estimate by the National Gambling Impact Study Commission, a body created by Congress to study the problem.

Cutting down on shopping or television may make sense for plenty of people, but it's probably not a life or death decision. And neither your boss nor your fellow taxpayers are likely to care -- at least not until there's research out there that shows they should.

The 5 most expensive addictions

• Alcohol. Estimated annual cost: $166 billion. Binge drinking hits the unemployed harder on a per capita basis -- 10.4%, vs. 8.4% of employed people. It is most prevalent in small metropolitan locales, rather than big cities or rural areas. The $18 billion spent on alcohol and drug treatment last year represented 1.3% of all health care spending.

• Smoking. Estimated annual cost: $157 billion. The tab includes $75 billion in direct medical expenses, with the rest in lost productivity from ill patients missing work. Given the low-tax (or no-tax) underground cigarette economy on the Web and on Indian reservations, it's unlikely that sales and usage have dropped much over the past decade, official government statistics notwithstanding.

• Drugs. Estimated annual cost: $110 billion. Like alcohol, illicit drug use is more prevalent among the unemployed. Most addicts are also heavy drinkers, though only a small minority of alcoholics are drug abusers. Crystal meth has followed marijuana, cocaine and heroin as the drug of choice among the young set.

• Overeating. Estimated annual cost: $107 billion. Overeating increases the risk of many health problems, including heart attacks. Obesity causes 14% of attacks suffered by males and 20% of those suffered by females, the National Institutes for Health says, and fewer than a third of adults get regular exercise. The bulk of the $107 billion is the direct cost to treat heart disease, osteoarthritis, hypertension, gall bladder disease and cancer.

• Gambling. Estimated annual cost: $40 billion. Addicted gamblers often feel compelled to chase after bad bets with more money in the hope of winning back their losses. And some who catch the fever develop the need to periodically raise the betting stakes to keep the same thrill. Also, addicts often face job loss, bankruptcy and forced home sales, and they are at greater risk to commit crimes like forgery and embezzlement.

By Tom Van Riper, Forbes