Implicitly Estimating the Cost of Mental Illness in Australia: A Standard-of-Living Approach

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Nghiem, Son
Khanam, Rasheda
Vu, Xuan-Binh
Tran, Bach Xuan
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2019
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Abstract

BACKGROUND: Estimating the costs of mental illness provides useful policy and managerial information to improve the quality of life of people living with a mental illness and their families. OBJECTIVE: This paper estimates the costs of mental health in Australia using the standard-of-living approach. METHODS: The cost of mental illness was estimated implicitly using a standard-of-living approach. We analysed data from 16 waves of the Household, Income and Labour Dynamics in Australia Survey (HILDA) using 209,871 observations. Unobserved heterogeneity was mitigated using an extended random-effects estimator. RESULTS: The equivalised disposable income of people with mental illness, measured by a self-reported mental health condition, needs to be 50% higher to achieve a similar living standard to those without a mental illness. The cost estimates vary considerably with measures of mental illness and standard of living. An alternative measure of mental illness using the first quintile of the SF-36 mental health score distribution resulted in an increase of estimated costs to 80% equivalised disposable income. CONCLUSION: People with mental illness need to increase equivalised disposable income, which includes existing financial supports, by 50-80% to achieve a similar level of financial satisfaction to those without a mental illness. The cost estimate can be substantially higher if the overall life satisfaction is used to proxy for standard of living.

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Applied Health Economics and Health Policy

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Health services and systems

Public health

Applied economics

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Nghiem, S; Khanam, R; Vu, X-B; Tran, BX, Implicitly Estimating the Cost of Mental Illness in Australia: A Standard-of-Living Approach., Applied Health Economics and Health Policy, 2019

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