Monday, April 11, 2005

Lies, Damned Lies, and Statistics

In speaking and writing on the socioeconomic impact of casinos, I have noticed that the gaming industry is reluctant to admit any negative consequences as a result of adding a casino in a county or other jurisdiction. On one hand, I can understand how an advocate for the industry might be expected to emphasize the sunny side of the street. However, it seems plain to me that there are some clouds, and that the industry would do well to step up and deal with some of these issues instead of taking an extreme position that turns out to be untenable.

A particularly troubling example is the frequently encountered argument against a connection between bankruptcy and casinos. In particular, I have heard industry advocates point to the state of Utah as an example that supposedly proves their point that casinos have no impact on bankruptcy. Their syllogism goes like this: (a) Utah has the highest rate of bankruptcy in the nation; (b) Utah has no casinos; therefore (c) casinos must have no impact on bankruptcy. I most recently saw this point being trotted out by an industry leader in an article that deals with our recent bankruptcy study. See the link below for the full story:

This argument is ridiculous, and the industry ought to be ashamed to make it. The fact that Utah has high bankruptcy rates without casinos simply shows that bankruptcy rates can have other causes besides problem gambling – a point with which we would not disagree. However, this statistic about Utah having high bankruptcy rates says nothing about the impact of adding a casino to Utah.

We do face a formidable challenge in the social sciences in finding a correlation between how events affect human behaviors. We can observe correlations in particular cases, and problem gambling literature is replete with examples of people who have gambled too much and filed for bankruptcy. Of course, others may have never gambled, but nevertheless file for bankruptcy because they lost a job, had a major medical crisis, or experienced the disruption of a divorce. Teasing out all of these effects can be difficult, but through large numbers of observations, you can get a sense of the way to bet. And the casino industry ought to understand that intuitively.


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