Question:
Discuss About The Gambiling Australia Economic Perspectives?
The study highlights on the economic analysis of the over consumption of gambling. Gambling takes in various forms that include lotteries, table games, poker machines and scratchies (Bilancini and D’Alessandro, 2012). Recent statistic reflects that Australians has participated in theses different forms of gambling in the previous year. It has been noted that electronic gambling machines are considered as the superseding source of revenue from gambling. In the year 2009, it has been estimated that there were more than 198,300 gaming machines in this nation and the revenue earned from them was near about $59,700. In addition, duties of gambling and taxes are an important funding source to the Australia’s government and hence directly employs for about 35,000 people (Delfabbro and King, 2012). The economic as well as social cost of gambling in Australia is discussed in this report. It also reflects on the gambling effects on economic efficiency. The study also focuses on the three policies that aids in reducing gambling in relation with the use of poker machines.
Gambling is recreational pursuit for the people of this nation. The stakeholders of this industry argue that gambling provides social benefits to the Australians (Gainsbury et al., 2014). They also squabble that gambling offers indirect range or intangible advantage to the local communities. These advantages include improving life quality for elderly, securing environments a high social cohesion. Social cost refers to the section of internal benefits as well as cost that the person does take into account while undertaking this activity. It relates to the externalities that influence the activity that are inflicted involuntarily on the society.
Gambling has adverse consequences to every aspects of society. From societal perspective, the main issue of gambling is stemming from poverty, poor condition of individuals health, low social as well as human capital and rundown of community resources. The economic policy solution regarding this issue is inserting caps on the machine numbers in area of highest socioeconomic disadvantage. Another sol;ution is ban on advertisement on gambling machines.
Addiction of gambling relates to pathological gambling consumption. It develops into addiction when this leads to obsession and adversely affects the life of the individual. Overconsumption of gambling invests much time as well as money of the Australians (Becchetti et al., 2016). It also loses social contract with self-esteem and self confidence. The above case study shows that around 1.4 million Australians are directly affected by gambling. Overexpansion of gambling leads to deterioration in Australia’s terms of trade that adversely affects the real income of the economy. The gambling dominant nation directs to balanced growth path and hence it becomes less vulnerable to nations business cycles.
Gambling affects the Australian economy in direct as well as indirect way. The direct impact of gambling expenditures represents net addition to the resources of the community. For example, casino directly or indirectly affects on the Australians income as well as their jobs. The direct impact of casino is on the nation’s income as well as employment that is associated with offering of commodities to its patrons. On the contrary, casino indirectly affects on the communities as employees expend their paychecks in their community and thus leading to more employment (M et al., 2014). Input-output model are used to estimate indirect effects of gambling. These models help in evaluating the effects of gambling on economic development and efficiency of Australia. It also helps in recognizing one industry output that are used as inputs in another industry. Thus, variation in one industry’s activities affects both the suppliers as well as customers associated with gambling. Moreover, these models also work through multipliers development that helps in concluding ripple effects on the economy. However, this model aids in explaining negative externalities that result in overconsumption of gambling and inefficient equilibrium above the socially optimum equilibrium (Arifo?lu et al., 2012). Thus, it throws spillover effect on other individuals as marginal private benefit (MPB) exceeds marginal social benefit (MSB). This is shown with the help of the diagram given below:
Figure 1: Negative Externality of Gambling
Source: (Authors creation)
As it is an addictive commodity, the demand becomes inelastic. Thus, taxation does not reduce the demand for quantity enough for MPB=MSB. It can also lead to gambling under black market and adds risk of violence, thus making inefficient solution. The above figure shows that MPB >MSB.
Australian government has introduced wagering tax for directing fund to gambling rehabilitation centre and offer service to the Australians. Tax reforms the externality as it intends to make both the consumers as well as producers pay social cost of products. However, this helps in reducing bad consumption and creates socially efficient outcome. If tax is not implemented then it leads to overconsumption or addition of gambling.
The three effective policies that facilitates in reducing gambling in relation to use of poker machines are:
Pigouvian tax- Pigouvian tax refers to the tax levied on the activity of the market that creates negative externality. This tax is proposed in order to correct outcome of inefficient market and is set equivalent to social cost of negative externalities (Philander, 2012). Pigouvian tax is imposed on activities of gambling in order to attenuate its external cost. It also helps in mitigating unbalanced growth biased by gaming via resource reallocation. Therefore, sin tax is noted for rising economic welfare of Australia. Australian government creates deadweight loss in order to restrict gambling supply in the market.
Figure 2: Pigouvian tax on poker machine
(Source: As created by author)
This model helps in promoting gambling tax regime that includes
Conclusion
It can be concluded from the above report that gambling consequence in negative health effect of the Australians. As Australians are considered as the productive gamblers in the globe, it is necessary to develop national strategy in order to recognize and reduce gambling problem. Problem gambling is noteworthy public health problems in this nation that affects Australians, medical practitioners and governments. Gambling activities in Australia have increased and diversified in recent years. Increase in gambling behavior increases prevalence of gambling problem as well as entrenched dependence of government upon its taxation. Therefore, as overconsumption of gambling causes negative externalities, Australian government adopts effective policies in order to curb gambling from the nation.
References
Arifo?lu, K., Deo, S., & Iravani, S. M. (2012). Consumption externality and yield uncertainty in the influenza vaccine supply chain: Interventions in demand and supply sides. Management Science, 58(6), 1072-1091.
Becchetti, L., Solferino, N., & Tessitore, M. E. (2016). A dynamic model of Gambling addiction with social costs: theory and policy solutions.
Bilancini, E., & D’Alessandro, S. (2012). Long-run welfare under externalities in consumption, leisure, and production: A case for happy degrowth vs. unhappy growth. Ecological Economics, 84, 194-205.
Delfabbro, P., & King, D. (2012). Gambling in Australia: Experiences, problems, research and policy. Addiction, 107(9), 1556-1561.
Gainsbury, S. M., Russell, A., Hing, N., Wood, R., Lubman, D. I., & Blaszczynski, A. (2014). The prevalence and determinants of problem gambling in Australia: assessing the impact of interactive gambling and new technologies. Psychology of Addictive Behaviors, 28(3), 769.
Gainsbury, S., Sadeque, S., Mizerski, D., & Blaszczynski, A. (2012). Wagering in Australia: A retrospective behavioural analysis of betting patterns based on player account data. Journal of Gambling Business & Economics, 6(2).
Gainsbury, S., Hing, N., Delfabbro, P. H., & King, D. L. (2014). A taxonomy of gambling and casino games via social media and online technologies. International Gambling Studies, 14(2), 196-213.
Philander, K. S. (2013). A normative analysis of gambling tax policy. UNLV Gaming Research & Review Journal, 17(2), 2.
Ross, D., Sharp, C., Vuchinich, R. E., & Spurrett, D. (2012). Midbrain mutiny: The picoeconomics and neuroeconomics of disordered gambling: Economic theory and cognitive science. MIT press.
Williams, R. J., West, B. L., & Simpson, R. I. (2012). Prevention of problem gambling: A comprehensive review of the evidence and identified best practices. Ontario Problem Gambling Research Centre and the Ontario Ministry of Health and Long Term Care.
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