Obesity costs drag down national good

The cost of obesity to Australia's collective wellbeing has reached $120 billion a year - the equivalent of about 8 per cent of the economy's annual output.

The Herald-Lateral Economics Index of Australia's Wellbeing - which uses a range of indicators to measure changes in national welfare - calculates a dollar figure on how obesity has an impact on Australia beyond its narrow economic effect.

It shows that the wellbeing cost of obesity has risen by nearly $50 billion a year since 2005-06. In that time the number of obese adults has risen from 3.2 million to 5 million, from 20.8 per cent to 28.3 per cent of the population. The index estimates that each one percentage point rise in the obesity rate costs about $4 billion a year in national wellbeing.

Official economic figures only pick up the direct economic effects of obesity, such as absenteeism due to obesity-related illnesses. But obese people feel worse about themselves, on average, because of their weight and the Herald-Lateral Economics index puts a dollar figure on these non-economic - but very significant - effects.

Index author Nicholas Gruen said halving Australia's obesity rate would be akin to making several major economic reforms.

"The index shows that, if we could halve the current obesity rate, that would generate about the equivalent amount of wellbeing as generating an additional $60 billion a year of income," he said.

In the December quarter alone, the wellbeing loss from obesity was a record $29.4 billion, up from $18.1 billion in the corresponding quarter in 2005.

The negative effects of obesity are growing faster than most other components of the index, including net national income, environmental degradation, inequality, life expectancy and job satisfaction.

"The relative importance of obesity in wellbeing is rising," the report says. Australia has one of the highest obesity rates in the world. The wellbeing cost of obesity rose by 6.4 per cent, or $1.8 billion, during last year.

The index reveals that mental illness is also a major drag on national wellbeing and calculates its wellbeing cost at about $190 billion a year.

''The rate of treatment of mental illness seems to be increasing strongly,'' the report says. ''The proportion of the mentally ill with GP treatment plans has risen to 19.9 per cent from 16.8 per cent in 2009. Each one percentage point increase in the rate of treatment is worth about $1 billion a year of wellbeing.''

Despite the negative effects of obesity and mental illness, Australia's overall wellbeing grew much faster than gross domestic product last year.

The Herald-Lateral Economics index rose by 1.8 per cent in the December quarter to be up 5.1 per cent over the last calendar year. Gross domestic product figures released by the Bureau of Statistics on Wednesday revealed growth of 0.6 per cent in the quarter and 3.1 per cent for the year.

The main factor driving national wellbeing higher was a 10 per cent jump in the rate of Australia's human capital accumulation - our collective skills - during last year. That increase more than offset another key component of the index - national income - which has been sluggish due to the decline in Australia's terms of trade.

Adult education was especially important in increasing national wellbeing. "The largest and fastest growing component of human capital is the adult formal education of the workforce," the report said.

"This investment in the skills and know-how of the population should ensure that the Australian population is able to generate significant income in the future, even if the prices of our resources decline."

The story Obesity costs drag down national good first appeared on The Sydney Morning Herald.

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