New economic research on "nudges" versus stronger interventions gives EAP and wellbeing budget owners in Australia a sharper way to think about alcohol-related absenteeism
The Australian Drug Foundation puts the cost of drug and alcohol use to Australian businesses at around $6 billion a year, most of it in lost productivity and absenteeism, as HRD Australia has reported. A more recent peer-reviewed study narrows that figure further: researchers using national survey data on Australian workers estimated alcohol-related productivity losses at roughly $4.0 billion in 2017, with absenteeism responsible for around 90% of that total. Employers have responded with everything from EAP referrals to workplace drug and alcohol testing regimes, particularly in mining and construction, where routine testing and supervisor-led referrals have become standard practice in many workplaces.
New economic research suggests there's a cheaper first step some employers are skipping.
What the research found
A working paper circulated in July through the US National Bureau of Economic Research, by economists John List (University of Chicago and the Australian National University), Matthias Rodemeier (Bocconi University), Sutanuka Roy (Australian National University) and Gregory Sun (Washington University in St. Louis), pulled together more than 1,200 estimates from over 600 studies. The aim: compare "nudges" — reminders, feedback tools, social-norm messaging and plain information campaigns — against price-based interventions, across five everyday consumer markets, one of which is alcohol.
The headline figure: the average alcohol nudge in the sample reduced consumption by about 19%. Translated into the researchers' "equivalent price change" measure — essentially, how large a price rise would be needed to produce the same effect — that's roughly the same demand response as a 34% increase in the price of alcohol, worth around US$0.60 on a standard American drink. (The dollar figures in the paper are calibrated to US alcohol prices and consumption levels, so they're best read as a directional guide for other markets rather than a literal local cost.)
Effects varied considerably by nudge type. Social-norm messaging — telling people how their drinking compares with peers — cut consumption by around 31% on average, and structured feedback tools by around 21%, both well ahead of plain information campaigns at around 11%.
For an EAP or wellbeing budget owner, the more useful number may be cost-effectiveness. A dollar spent on alcohol-focused nudges produced roughly three-and-a-half times the aggregate behaviour change of a dollar spent on price-based measures, according to the paper's estimates. On a pure bang-for-buck basis, the cheap tools — social-norm campaigns, feedback dashboards, brief information nudges — came out well ahead.
The catch
Being the more efficient dollar and being large enough to close a serious problem are two different things, and this is the part of the paper that matters most for anyone weighing a bigger investment against a cheaper one. Once the researchers looked at total impact rather than impact per dollar, price-based tools scaled up to their calculated optimum generated somewhat more overall benefit than the best nudge in the alcohol market specifically (roughly US$278 versus US$196 per drinker, per year, in the paper's modelling) — a pattern that held in most of the five markets studied, with cigarettes as the one exception, largely because pricing there had already done most of what it could do.
For alcohol, the paper's own numbers argue nudges are the better first move, not necessarily the only one needed. If the goal is a broad, organisation-wide dent in the kind of absenteeism the Australian data describes, a social-norm campaign or feedback tool is likely to move the needle efficiently. For the harder cases — the safety-sensitive roles where testing regimes and EAP referral pathways already exist — the research suggests a nudge alone is unlikely to replace those stronger tools, and probably shouldn't try to: the paper also finds that layering a nudge on top of an already well-sized intervention tends to buy very little extra, largely because the people who respond to nudges and the people already being reached by testing or referral programmes tend to overlap.
What this means for a wellbeing budget
For wellbeing and EAP budget owners across Australia, Canada, the UK and New Zealand, the practical guidance is fairly specific: before adding cost to an alcohol-related programme, work out whether the gap you're trying to close is a "didn't realise how much I drink relative to peers" gap or a genuinely severe one. Nudges are the higher-return tool for the first kind of gap, and cheap enough to deploy broadly — a case HRD has made before about tracking wellbeing ROI carefully rather than assuming more spend automatically means more benefit. For the second kind, where testing or EAP referral is already doing the heavy lifting, the research suggests limited additional value in layering on more nudging — a plateau HRD has explored before from the engagement side.
As with any broad campaign, design matters more than the decision to run one at all. The paper's own comparison of nudge types — social norms and feedback well ahead of generic information — echoes HRD's earlier point about customising wellness programmes to the specific workforce rather than rolling out generic campaigns.
A caveat worth keeping
The researchers flag their own limitation: published studies tend to over-report striking results. The team found evidence of that kind of bias in the energy, cigarette and flu-vaccine components of their dataset specifically, but not in the alcohol literature. It's a reasonable reason to treat any single figure here as a well-informed estimate rather than a guarantee — in-house data will still matter for any given workforce.
None of this changes the case for the more heavily resourced parts of a drug-and-alcohol strategy that HRD has covered elsewhere. But for the more everyday question of what to try first, cheapest and broadest, the research points in a clear direction: try the social-norm nudge before reaching for a bigger budget line.
