The wellbeing cost of mental health hits $200 billion

The cost of mental illness to Australia's wellbeing has hit $200 billion a year - equivalent to about 12 per cent of the economy's annual output.

The Herald-Lateral Economics Index of Australia's Wellbeing – which provides a better measure of changes in national welfare than traditional economic data – shows the drag on our collective wellbeing caused by mental illness is worth $40 billion more than a decade ago.

The index's author, Dr Nicholas Gruen, who is also the Chair of The Australian Centre for Social Innovation, said mentalillness is "under-appreciated" as an economic problem.

About one in five adults experience mental illness in any year which makes it a major drag on Australia's collective wellbeing. Traditional economic measures only pick up some of the financial impact of mental illness, such as days off work. But those with poor mental health tend to report much lower levels of wellbeing than average and the index puts a dollar figure on these major non-economic effects.


In 2005-06 the index put the wellbeing cost of mental illness at $159.7 billion but that had climbed to $203.1 billion by last financial year. The drag on wellbeing caused by mental illness was $52 billion in the June quarter alone.

The rising rate of obesity is another major drag on welfare. The index shows the annual wellbeing cost of obesity reached $122.5 billion last financial year. Australia has one of the world's highest rates of obesity and drag on wellbeing caused by obesity measure has been growing more quickly than any other index component.

Despite the negative effects of mental illness and obesity rates, the wellbeing index overall rose by 2.5 per cent in the June quarter.

The solid growth in the wellbeing index was due mainly to improvements in formal adult qualifications. The proportion of the prime working age population – those aged between 20 and 64 – with a post-school qualification has now risen above 60 percent. That compares to just 47 per cent in 2005.

The index result was also buoyed by a reduction in the number of Australians in long-term unemployment – those who have been out of work for a year or more. This helped to reduce the drag on wellbeing caused by skills atrophy – when skills deteriorate during long periods out of work.

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