The high cost of stress

In a September 5 article, The New York Times reported on the high cost of stress:

Workplace stress costs the nation more than $300 billion each year in health care, missed work and the stress-reduction industry that has grown up to soothe workers and keep production high.

$300 billion? That's an awfully round number, isn't it? How accurate is it? Forbes, NPR, MSNBC and others quoted the number as though it were right. Did they check?

That estimate comes from the AIS: the American Institute of Stress.

According to Dr. Paul Rosch of the AIS, the statistics are based on a 1979 book titled “Stress and the Manager” by Karl Albrecht. Even though “Stress and the Manager” warns that “any attempt to estimate a dollar cost of chronic stress in a business organization or in American business in general, would of course involve gross guesswork and speculation,” Albrecht “brazenly” (his word) speculates: he guesses an absenteeism rate due to stress, guesses a turnover rate due to stress, guesses an “overstaffing” cost for reduced productivity due to stress, and estimates a cost per absentee day per worker. Then he concludes that the approximate cost to U.S. businesses totals $150 billion per year.

Perhaps AIS adjusted these “guesses” for inflation.

One additional source of errancy is that the number confuses correlation (things that happen at the same time) and causality (one causes the other). It assumes that because these various traits show up in the workplace, they are not just correlated with stress but actually caused by it. Technically, these workplace problems are stress-related, not stress-caused.

Unfortunately, even the estimate that stress-related costs amount to $300 billion is not justified, as the AIS did not bother to apply their percentages (such as 19 percent of absenteeism) to actual costs per worker ($645 per year in 2003, according to CCH, Inc.) times the number of workers in the United States, to obtain the cost of absenteeism related to stress. In fact, the costs associated with stress may be much higher (or much lower) than $300 billion.

Check out the whole evalution of this analysis here. It is a great example of how, when deadlines are approaching, major media outlets often present pure guesses as being good estimates of things that often are difficult to even define, let alone measure.