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Update: Economics of Mental Health in Australia

Since its establishment, the National Mental Health Commission has been seeking to put mental health on the economic agenda. The potential economic and social gains from mental health reform from investing in promotion, prevention and early intervention, could dwarf the gains from many other reforms currently on the economic policy agenda.

Drawing on the expertise of Professor Martin Knapp from the London School of Economics and Political Science, the Commission has made progress in this important objective in 2016, by bringing together a wide range of stakeholders to consider three broad areas of economic interest:

  • Are resources allocated efficiently in mental health in Australia?
  • Is the 'mental wealth of Australia' a useful addition to policy decision making?
  • What would be the return on investment of a response to the burden on mental ill-health in Australia?

In December 2016, Professor Knapp and the Commission discussed these themes with Commonwealth departments of Health, Social Services, Treasury and Prime Minister and Cabinet, state and territory departments and mental health commissions, consumers and carers, health researchers and economists, and representatives from the private and community-managed sectors.

Discussions canvassed the economic causes, costs and consequences of mental ill-health and the practicality of using economics to help make the case for change. Also deliberated was the large and growing number of economic issues that need to be considered in mental health policy. For instance:

  • How greater social and economic participation by people with mental ill-health could help to improve both national productivity and wellbeing.
  • NDIS personal budgets and choice and control on the demand side, and the development of provider markets on the supply side.
  • Consideration of choice and competition in the design, development and commissioning of public sector, private sector and not-for profit services.
  • Current considerations around health and welfare reform, using established actuarial methods to quantify and manage long-term risks through an investment approach.

Other topics discussed included the importance of evidence to support decision making, challenges relating to measurement and reporting, and the need to invest in mental health promotion and prevention. Also, while the concept of ‘mental wealth’ holds some promise, we heard that it is a term that requires further exploration.

Through these meetings, the Commission heard there is a growing evidence base for substantial returns on investment from a wide range of mental health and wellbeing interventions. However, there are opportunities for improvement to better translate and communicate research findings so they are more useful and accessible to policy decision makers.

In addition, the benefits gained are often not in the same portfolio area of the investment – for instance, interventions to address conduct disorder in children can help to avoid significant future costs in the justice system. There are challenges relating to Australia’s federated system and of the effect of ‘diagonal accounting’– where the savings from mental health investment accrue in the future, in another portfolio and often at another level of government – indicating that the need for coordination and integration is perhaps greater in mental health than in any other area of health.

This project revealed significant interest in using economics alongside other perspectives to better inform decision making and optimise mental health and wellbeing outcomes, and in communicating the benefits of reform from an economic perspective. This includes interest from the sector and the research community to more closely engage with decision makers to ensure they have the information, skills and capacities they need to direct policy and program settings in a way that is evidence-based and meets community expectations and preferences.

Supporting the view of mental health as an invest-to-save issue, better allocating resources to their most productive uses to meet individual and community preferences around mental health and wellbeing will be key to improving efficiency, national productivity and better mental health and wellbeing. While most parties acknowledged that resources in mental health are currently not efficiently allocated, it was also suggested that this could be improved by better data and communication about pressures in supply, demand and outcomes in the system.

Our work so far around the economics of mental health is just a starting point. The Commission would like to thank all who have participated so far in what have been informed, sophisticated and considered conversations. With a great number of opportunities for further collaboration, the Commission looks forward to continuing this important work.


The National Mental Health Commission issued a media release about the Economics of Mental Health in Australia.

Media Release

National Mental Health Commission Initiatives

Economics of Mental Health in Australia Symposium

Economics of Mental Health in Australia Workshop

Economics of Mental Health Resources

Below are some of the many references that have been identified in the Commission’s work so far around the economics of mental health.

Please note this is not intended to be an exhaustive list of materials, but rather a sample of the substantial work in this area both in Australia and internationally.

Behavioural insights team

NSW Department of Premier and Cabinet


Victorian Department of Premier and Cabinet


Commonwealth Department of Prime Minister and Cabinet


United Kingdom Cabinet Office


Childhood bullying victimisation is associated with use of mental health services over 5 decades: a longitudinal nationally-representative cohort study


Adult Health Outcomes of Childhood Bullying Victimization: Evidence From a Five-Decade Longitudinal British Birth Cohort

Burden of disease

Global burden of disease attributable to mental and substance use disorders: findings from the Global Burden of Disease Study 2010

Costing/Cost of illness/cost-effectiveness

Cost-effectiveness of computerised cognitive behavioural therapy for anxiety and depression in primary care: randomised controlled trial


Financial cost of social exclusion: follow up study of antisocial children into adulthood


Cost of depression among adults in England in 2000


The costs and benefits of interventions in the area of mental health: a rapid review


The evidence on the costs and impacts on the economy and productivity due to mental ill health: a rapid review.


The cost of mental health and substance abuse services in Canada.


Investing in recovery: Making the business case for effective interventions for people with schizophrenia and psychosis.

Determinants, Dynamics and Consequences of Mental Illness

Financial decision-making in the household: Exploring the importance of survey respondent, health, cognitive ability and personality


Long-term health effects of Vietnam-era military service: A quasi-experiment using Australian conscription lotteries


Child mental health and educational attainment: Multple observers and the measurement error problem


The effect of mental health on employment: Evidence from Australian panel data


The income gradient in childhood mental health: all in the eye of the beholder?


Exploring the intergenerational persistence of mental health: Evidence from three generations

Early intervention, promotion & prevention

Mental health promotion and mental illness prevention: The economic case


Prevention: wrestling with new economic realities. Tizard learning disability review


National Research Council and Institute of Medicine 2009. Preventing Mental, Emotional, and Behavioral Disorders Among Young People: Progress and Possibilities (register to download PDF)


Committee on the Prevention of Mental Disorders and Substance Abuse Among Children, Youth, and Young Adults: Research Advances and Promising Interventions

Economic hardship

The Mental Health Consequences of the Recession: Economic Hardship and Employment of People with Mental Health Problems in 27 European Countries


The economic case for better mental health


Public health economics: a systematic review of guidance for the economic evaluation of public health interventions and discussion of key methodological issues


Political and Institutional Influences on the Use of Evidence in Public Health Policy


The UK National Institute for Health and Care Excellence (provides guidance, advice, quality standards and information services for health, public health and social care).

Housing & homelessness

Mental health and housing: Potential economic benefits of improved transitions along the acute care pathway to support recovery for people with mental health needs


Clinical efficacy of computerised cognitive behavioural therapy for anxiety and depression in primary care: randomised controlled trial


Can we model a cognitive footprint of interventions and policies to help to meet the global challenge of dementia?

Mental wealth

Foresight Mental Capital and Wellbeing Project 2008. Final Project report


How's Life? Measuring well-being


Community Wellbeing From the Ground Up: A Yawuru example


Mental Well-being Impact Assessment


Community Capital - The Value of Connected Communities


The mental wealth of nations

Outcomes and evaluation

Policy advice and Treasury's Wellbeing Framework


Guide to Evaluation in Health Research


The Magenta Book: Guidance for Evaluation


Persistent and contemporaneous effects of job stressors on mental health: a study testing multiple analytic approaches across 13 waves of annually collected cohort data


Patient reported outcome measures in practice


Understanding controlled trials. Why are randomised controlled trials important?


How do you know which health care effectiveness research you can trust? A guide to study design for the perplexed


The Implications for Health, Depression, and Life Satisfaction from a Permanent Increase in Income for the Disadvantaged Elderly: Evidence from Taiwan


Early Childhood Investments Substantially Boost Adult Health


The impact of Beyondblue: the national depression initiative on the Australian public’s recognition of depression and beliefs about treatments


Trends in mental illness related public stigma among the English population in 2003-2013: influence of the Time to Change anti-stigma campaign


Economic evaluation of the anti-stigma social marketing campaign in England 2009-2011


Evaluation of the individual budgets pilot programme


The costs of perinatal mental health problems


Perinatal depression and child development: exploring the economic consequences from a South London cohort


Lifetime costs of perinatal anxiety and depression

Quality of Life / Preferences

Women’s Preferences for Treatment of Perinatal Depression and Anxiety: A Discrete Choice Experiment


Measuring the Sensitivity and Construct Validity of 6 Utility Instruments in 7 Disease Areas


Deriving population norms for the AQoL-6D and AQoL-8D multi-attribute utility instruments from web-based data


Comparing and explaining differences in the magnitude, content, and sensitivity of utilities predicted by the EQ-5D, SF-6D, HUI 3, 15D, QWB, and AQoL-8D multiattribute utility instruments


Modelling utility weights for the Assessment of Quality of Life


Assessing outcomes for cost-utility analysis in depression: comparison of five multi-attribute utility instruments with two depression-specific outcome measures

Resource allocation

Investing in recovery: Making the business case for effective interventions for people with schizophrenia and psychosis

Return on investment

Social Return on Investment (SROI) methodology to account for value for money of public health interventions: a systematic review


Return on Investment: Mental Health Promotion and Mental Illness Prevention


Scaling-up treatment of depression and anxiety: a global return on investment analysis


Social Return on Investment: Lessons learned in Australia


Suicides associated with the 2008-10 economic recession in England: time trend analysis


Impact of 2008 global economic crisis on suicide: time trend study in 54 countries



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