Sweden gets into sex, drugs and ... GDP

Sweden’s statistics bureau has set up a “vice squad” to work out how much Swedes spend on prostitutes, illegal drugs and smuggled alcohol to calculate the true size of the economy in compliance with European Union rules.

The head of the team, Birgitta Magnusson, said that the overall impact on Sweden’s $365 billion gross domestic product would be “very, very small.”

The European Commission ruled in 1996 that national accounts must include all transactions -- an easier task for states like the Netherlands where some drugs and prostitution are legal, but a tall order for countries like Sweden where they are outlawed.

Drugs and alcohol smuggled from abroad are bought in foreign currency purchased in Swedish crowns, a transaction which already appears in GDP calculations, Magnusson said.

Her three-person team must find out the drugs’ street value to calculate “the margin the seller in Sweden puts on top of the import price for selling on the street.” This data is tallied with data on how many hard drug users there are in the country.

The value of smuggled alcohol is estimated in the same way but the problem with prostitutes is not one of price but of frequency.

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“People offering their services on the Internet have price lists for different services, so you can get an estimate of how much they charge, but you don’t know the frequency of how many customers they have a day, so it’s very difficult,” she said.

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One clue is that many prostitutes are drug addicts too “so you can calculate how much they have to earn to finance their drug abuse,” said Magnusson.

She would not predict when the data could be included in Swedish GDP, saying all EU members’ statisticians would first cross-check methodology to make sure the figures were comparable.