What does obesity cost the economy?

“Obesity drives disease. It increases the risk of cancer, diabetes and heart disease—and it costs our economy £27 billion a year.”

George Osborne, 16 March 2016

Announcing a tax on sugary drinks companies yesterday the Chancellor said it would help to prevent obesity, which he said costs the economy £27 billion a year.

£27 billion may be the best estimate we’ve got for the total costs to the NHS and the economy of people considered to be overweight and obese in England, but there are issues with it. We don’t know enough to be as precise as saying the cost is £27 billion.

Some of the research underpinning the figure is over a decade old. Patterns of obesity may have changed since then, and the economy definitely has. It also relied on some assumptions that were uncertain at the time.

Some of the analysis could seem a bit counter-intuitive. The ‘total cost’ combines the cost to the NHS budget for treating people with obesity-related problems with the reduction in UK economic growth because they miss work.

Where the figure comes from

The government takes its estimate of £27 billion from the National Obesity Observatory, now part of Public Health England.

This took the figure from 2007 research, which in turn based its calculations in part on 2004 research by Parliament’s Health Committee.

The 2004 research put the total cost of people considered obese at between £3.3 billion and 3.7 billion in 2002. That was made up of the cost of treating obesity and its consequences—about £1 billion—and the earnings lost due to sickness and premature mortality among obese people.

It said that “if in crude terms” the cost of people considered overweight was half that of people considered obese, and given that there are about twice as many people who are overweight as obese, the total costs of both overweight and obese people would be about £6.6-7.4 billion a year. So about £7 billion.

So the research found the total costs of people being overweight or obese (£7 billion) were seven times the costs of treating obese patients (£1 billion).

The more recent estimate from 2007 is based on the assumption that the total costs of people considered to be overweight or obese continue to be seven times the cost of NHS treatment.

It estimated that the cost of treating obesity alone would be £3.9 billion by 2015, based on projections of the population’s body mass index profile, the effect this would have on diseases in the population, and the cost to the NHS of treating these diseases.

It multiplied this £3.9 billion by seven to reach the estimate that the total cost would be £27 billion by 2015.

A reader pointed out to us that the estimate didn’t consider any net savings to the NHS budget if people die from obesity-related illnesses, rather than other diseases.

A lot can change in a decade

Changes in diet since these estimates were made could have affected the number of overweight people, which in turn could have increased or reduced the costs to the NHS and to the economy. The cost of NHS care could have deviated from the forecast for other reasons—for example if drugs costs went up faster than expected.

Similarly, it’s not clear that total costs were or will always be seven times the cost to the NHS, as they—roughly—were deemed to be in 2002.

For instance changes to the labour market and to the benefits system could change the employment rate for people considered to be overweight or obese. That means the overall economic cost could change relative to the treatment costs.

As the National Obesity Observatory said of the research:

“Whilst modelling is helpful, it necessarily relies on existing patterns of treatment and assumptions about continued patterns of eating and physical activity as well as behavioural and social responses to obesity. It might also be helpful to look at alternative scenarios as part of modelling estimates such as: obesity trends continue; obesity continues to rise by a specified percentage per year; obesity is reduced by a specified percentage per year.”

Finally, the £27 billion was in 2007 prices. In today’s prices the cost would be higher.

Update 13 December 2016

We updated this piece in response to feedback from a reader. We clarified that the ‘total cost’ given by the original report combined the cost to the NHS budget with the reduction to UK economic growth, and that it didn't include any potential savings to the NHS.