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

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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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Data Availability Statement

The data that support the findings of this study are available upon request from the Melbourne Institute [https://melbourneinstitute.unimelb.edu.au/hilda/for-data-users].

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Acknowledgements

We are grateful to three anonymous referees, two guest editors and the editor of this journal for their feedback, which has improved the paper. This paper uses unit record data from The Household, Income and Labour Dynamics in Australia (HILDA) Survey, which is conducted in partnership between the Department of Social Services (DSS) and the Melbourne Institute. Appropriate ethical approval was gained during the study. The findings and views reported in this paper are those of the authors and should not be attributed to the DSS or the Melbourne Institute.

Author information

Authors and Affiliations

  1. Centre for Applied Health Economics, Griffith University, Brisbane, QLD, Australia

    Son Nghiem

  2. School of Commerce and Centre for Health, Informatics, and Economic Research, University of Southern Queensland, Toowoomba, QLD, Australia

    Rasheda Khanam & Xuan-Binh Vu

  3. Institute of Research and Development, Duy Tan University, Da Nang, 550000, Vietnam

    Xuan-Binh Vu

  4. Institute for Preventive Medicine and Public Health, Hanoi Medical University, Hanoi, Vietnam

    Bach Xuan Tran

  5. Bloomberg School of Public Health, Johns Hopkins University, Baltimore, MD, USA

    Bach Xuan Tran

Authors
  1. Son Nghiem
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  2. Rasheda Khanam
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  3. Xuan-Binh Vu
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  4. Bach Xuan Tran
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Contributions

SN conceived the project idea, requested data, conducted the analysis and prepared the manuscript. RK and BT were involved in discussions to expand the scope of the analyses and edited the manuscript. BV reviewed the literature, prepared data and edited the manuscript.

Corresponding author

Correspondence to Son Nghiem.

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Funding

This study did not receive any funding.

Conflict of interest

Son Nghiem, Rasheda Khanam, Xuan-Binh Vu and Bach Xuan Tran declares that they have no conflict of interest.

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Nghiem, S., Khanam, R., Vu, XB. et al. Implicitly Estimating the Cost of Mental Illness in Australia: A Standard-of-Living Approach. Appl Health Econ Health Policy 18, 261–270 (2020). https://doi.org/10.1007/s40258-019-00526-y

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  • DOI: https://doi.org/10.1007/s40258-019-00526-y

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