What the gun buyback cost

In my post on Sunday, I used the figure of $500 million for the cost of the Australian gun buyback, but you might argue that it was a bit cheaper than that, as the Gun Control Australia website explains:

There were about four million guns in Australia. One million were no longer in the legal category so a gun buy-back scheme was introduced to purchase these. The estimated average price was $500 per gun. Hence 500 million dollars was set aside. Only 640,000 guns were offered for purchase, hence $320 million was used or this purpose. About another 40 million dollars was used for administration and assistance to gun traders. Since the 500 million dollars had come from a medical levy the balance was distributed to medical research and welfare.

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8 Responses to What the gun buyback cost

  1. Anyone who accepts Gun Control Australia’s information without scrutiny is revealing their biases.

    The amount paid in direct compensation up to January 1999 was $378 million. Some dealer claims were still to be settled at that time. Then there was the pistol buyback in 2002, which added more than $100 million.

    This cost does not include administration and implementation of the program, quite a lot of which was undertaken by the States which were reimbursed by the Commonwealth. For example, there were a number of “buyback” centres dotted around the country in which private sector gun experts were employed to value surrendered firearms. There were also staff employed to operate the large crushing machines.

    I believe $500 million would be on the low side for the initial buyback alone.

    My source is the Australian Institute of Criminology: http://aic.gov.au/publications/tandi/ti104.pdf

  2. ChrisPer says:

    I have tried to determine the real cost. The Howard Government has been surprisingly secretive about this. Hansard has partial and early figures. It is however on a par with the intellectual corruption that normally goes with gun control research that the costs imposed on others are ignored.

    - The levy was supposed to raise $500M.
    - $45M was kept in the kitty and available for the stupidly wasteful handgun buyback, according to John Howard. That gives the lie to the GCA.
    - The $368M was incomplete, and only what was paid to individuals.
    - An auditors report investigated the mishandling of the compensation to dealers, and possibly more. It has never been made public.
    - Costs outside this include perhaps 850,000 safes at $350 each on average – that is $280M paid by licensed owners at Govenment fiat not counting security such as alarms, installation and so on.
    - The amount of business destroyed was huge, and kept secret.
    - The bureaucratic waste and lost productivity trying to work with the licensing system is staggering.
    – I put together a scratch sheet on these costs, but it wasn’t complete. For instance I have since learned that though I may pay $70 or so for a licence in WA, its more like $270 in NSW. http://www.class.org.au/CostsOfBuyback.htm

    Andrew, you very kindly provided an estimate of the value of one life. Perhaps you might point us to a real estimate of all costs both Government and private that the gun control regime inflicts?

    And really, GCA? They are about as trustworthy as the Joe Vialls conspiracy nuts.

  3. Christine says:

    ChrisPer: thanks for the information. Interesting. I’ll try to look at your stuff some more over the next month or so.

    It’s always tough to know what exactly to include in a CBA. If you include gun business destroyed, then shouldn’t you include the increase in business to safe and alarm manufacturers? If you include the cost of obtaining a firearms permit, then do you include the benefit of either the extra tax revenue raised, or the wages of the person employed?

    I’d also like to see survey figures asking how much individuals would be willing to pay to remove the weapons covered by the buyback out of circulation, and to have firearms registered and stored safely. Contingent valuation has been widely used to value other public goods. Of course, though, we know that individuals massively overestimate the costs of low probability events, so this one would likely result in values on the buyback alone of well over $500m.

    This sort of stuff can go on for ever, and that in this case I’d really want someone very experienced in cost-benefit analysis doing the work. That’s not me, sorry.

    We did the back of the envelope calculation because $500m sounds like a lot of money, and the question of whether it was worth it was raised in comments here last year. You may remember that I said that I thought it would be a completely reasonable question even if there were some ‘lives saved’ – I thought total numbers would be quite small, and that on balance it was likely that a CBA would have found it not worthwhile. Since then, I’ve moved to thinking on balance it was worth it. But good evidence one way or the other will still move me.

  4. ChrisPer says:

    Thanks for the encouragement, Christine!

    You are right to point out the different ideas of whether an item is a cost or a benefit. I understand for instance that the cost of motor vehicle crashes is measured as a plus for economic activity (eg GDP) even though in human terms it is a measure of waste and harm.

    I did things like calling WA firearms branch to find out how big their section is and individual dealers to ask about effect on business, and levels of compensation; as one put it ‘Even though we were thoroughly shafted in the process, I consider myself morally bound by the confidentiality agreement we had to sign to get the compensation.’

  5. ChrisPer says:

    So I go on to say that ongoing costs are also very much of interest.

    This is one area where ‘user pays’ to receive strongly negative benefit, while the society as a whole receives a notional benefit that is very small, difficult to measure, and unrelated to the actions of the class of people paying the costs (ie the normal people who own firearms).

    In addition, the principle of ‘Committment and consistency’ (Cialdini) does result in those paying the costs becoming increasingly committed to their activity, to the extent of valuing it higher than the advantages of compliance with a law designed, in their opinion, to oppress them.

    Here is where the worldview of ‘Gun Control Australia’ is also significant. I have been reading their output for long time, and they are… interesting. This group is somewhat of the psychological nature of a hate group, in that they deny shooters the benefit of a true good reputation and attribute the actions of criminals to them; if you read their stuff they go to a lot of effort to re-categorise the legitimate as somehow responsible for the evils of others. GCA are only interested in laws targeted to take guns from the legitimate mainstream.

  6. Christine says:

    ChrisPer, I don’t want to be on any of the sides that seem to have formed in the gun control debate. From an outsider’s perspective, both camps are pretty much right to expect to be quite harshly insulted by members of the other camp, and anyone who strays into the middle ground is in danger too (sad – makes you feel you need to join a camp to take shelter). I’m sure there’s a lot of argument about who threw the first insult, but I doubt that will ever be resolved satisfactorily.

    On the question of who bears the costs of the laws : a simple economic answer would be that IF you own a gun and keep it in an unsafe place, and IF there’s a 0.01 per cent probability (disclaimer – totally made up probability) that gun will be stolen and be used to kill someone in the same year, and IF the value of a life is $2.5million, then you having that gun in an unsafe place has an external cost to the Australian public of $250 per year. (I think – there are issues with one-offs and probability of gun being used in one year and not in another, or used every year – it’s a bit complex and I don’t want to stake too much on the calculation.) These costs should be factored into the costs of owning a gun, in order to get to an efficient allocation, not because the gun owner is morally responsible for the actions of the criminals.

    A typical approach would be to tax the good or service concerned – in this case, $250 per year. Or we could just ban them. Or we could have a law that allows family members of someone killed by a gun stolen from Mr X to sue Mr X for compensation, except Mr X is unlikely to have enough $ to pay up, so that likely wouldn’t work very well, and I think it’s not fair from Mr X’s perspective either (per moral responsibility). But this line seems to be being used in the case of some pool deaths, which is somewhat analogous.

    Note that this is all ‘if’ statements. I’m speaking entirely in hypothetical terms, not saying what policy should look like.

  7. ChrisPer says:

    Sure, its interesting to hypothesise. However, compare the case when a person chooses to go the black market route. Pay black market prices, probably part of a drug-using, alcohol-enriched social environment; more likely to be burgled, unlikely to have security, more likely to be in an accident or incident. This is the typical context of gun crimes and accidents.

  8. Christine says:

    FWIW (not too much – not a very controversial point, I imagine), I reckon you’re right that people going the black market route are shadier characters than people going the legal guns route, and that there’d be a higher incidence of violent crime (and perhaps theft, too) among that group. Not sure what the aggregate statistics say, though, since that’s going to be a small fraction of the overall population.

    And there’s a possibility that banning stuff may actually causes more blackmarket type activity (some economists – eg Jeff Miron – argue that in the case of drugs it does).

    I’d like to see empirical work on this, but since apparently even legal gun owners aren’t going to tell non-government surveyers the truth about whether they own guns or not, and police crime statistics are going to be affected by redefinitions of what’s a crime and intensity put into focussing on gun crimes post-law change, I suspect we’re not going to be able to find out too much about this possibility.

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