November 23, 2011 - 11:39AM.
A leading actuary has lampooned health lobby figures on the costs of smoking and obesity as being extravagantly inflated and based on suspect methodology.
“The numbers are all over the place,” writes Geoff Dunsford in the September edition of Actuary Australia. And they are “big numbers”– the implication being that they are too big.
“Obesity costs $58.2 billion,” he exclaims,“that’s around twice the cost of age pensions!”
The sheer size of the numbers, argues the Sydney actuary, perverts government policy. It can lead to poor spending decisions. The credibility of the numbers from the health lobby is therefore critical to government policy.
The press and the public have been led to believe that the costs to the system are higher than they really are so the government can “justify use of taxpayers’ money on measures to reduce its prevalence and prevention”.
Dunsford looks at three public health issues: obesity, smoking and depression.
1.“....obesity .... drains the national budget each year by $58.2 billion”,(Sun Herald report, March 13, 2011).
2.“...smoking ... costs our society $31.5 billion each year”,(Nicola Roxon, media release, April 7, 2011).
3.“Depression-associated disability costs the Australian economy $14.9 billion annually”,(beyondblue website)
In the first case, the newspaper story was based on an Access Economics report for Diabetes Australia titled,“The growing cost of obesity in 2008: three years on”.
Access Economics estimated the cost of obesity to Australia at $58.2 billion. And sure enough, this enormous headline number promptly bobbed in the press.
On Dunsford’s analysis, however, the figures are flawed, skewed by the “non-financial” estimates to make obesity seem a lot more costly to the taxpayer than it really is.
The costs break down as $3.9 billion for the health care system,$4.4 billion in “other” costs relating to lost work days, taxes forgone and other productivity losses.
Then there is the big one:$49.9 billion in “non-financial costs”. This relates to “burden of disease” or the personal cost of obesity. Dunsford asks,“how come this is included in a total in an announcement which appears – at least superficially – to represent real money costs?”
The “burden of disease” numbers are calculated by working out “years of life lost through disability and premature death” and Access came up with $6.35 million for the value of a statistical life (VSL) and $266,843 for the value of a statistical life year (VSLY).
Dunsford argues that it is taxpayers and consumers who will end up paying for all this statistical life.
“The elaborate details on labels of packaged food products in supermarkets are testimony to the current massive regulations supporting such details, but more are planned by Food Standards Australia NZ and the National Preventative Health Taskforce,’’ he says.