Using data from the World Health Organisation (WHO)i, a 2014 study by the McKinsey Global Institute (MGI), Overcoming obesity: An initial economic analysis, focuses on the financial cost of obesityii. The report states that in 2014, almost 30 per cent (2.1 billion people) of the global population of 7 billion was either obese or overweight, which is nearly two-and-a-half times the 840 million who are undernourishediii. The worldwide economic costs of obesity have risen to US$2 trillion annually, which is the same monetary impact as armed conflict, and slightly less than the costs incurred by smokingiv. This is about 2.8 per cent of economic activity worldwide, which adds up to between 2 to 7 per cent of the health care budget in developed countriesiv. Meanwhile, only 0.25 per cent of the total cost of obesity globally is used for prevention strategies, while the rest is used for dealing with the consequencesii.
The MGI report’s estimate of the global economic toll from obesity includes lost productivity (nearly 70 per cent of the total cost of obesity), health care usage, and the investment needed to combat obesityiii. These sums were calculated on estimates of the current costs of obesity: when the problem increases as obese people get older (and there are more of them), the report projects there will be higher future costsiii. Obesity and overweight rates in North Africa, Latin America, and the Middle East are at the same level as Europe, with the rate of obesity also rising in South Asia and East Asiaiii.
Australia’s getting bigger
Australia’s obesity rates are increasing faster than the rest of the world and a quarter of our children are overweightv. We are among the highest ranking of the developed nations for having a wide prevalence of obesityvi: the Australian Heart Foundation says more than a third of Australian adults are overweightvii. Compared to non-indigenous people, Aboriginal and Torres Strait Islander women are 1.7 times more likely to be obese and men 1.4 times more likelyviii.
A 2014 report, Obesity: Prevalence Trends in Australia, prepared for the Federal Government’s Australian National Preventive Health Agency, said that, based on health service usage and health-related expenditure by individuals, the economic cost of overweight adults in 2005 was about AUD$21 billion in both direct healthcare and non-healthcare costs, plus $35.6 billion in government subsidies, which includes payments for those on the aged pension, disability pension, veteran pension, mobility allowance, sickness allowance and unemployment benefitviii.
The report said analysis by KPMG estimated the direct and indirect costs of obesity in 2008-09 was $37.7 billion (3.1 per cent of GDP)viii. The direct financial cost was $7.7 billion, of which $1.3 billion was spent on obesity-related conditionsviiiM and $6.4 billion (0.5 per cent of GDP) was due to productivity lossesviii. The remaining $30 billion was spent on “burden of disease” (i.e. financial and social) costsix.
National research showed the biggest risk factors for gaining weight are stress (especially financial worries), lack of access to green space and healthy food, lack of access to obesity-related health services, and poor sleepviii.
The McKinsey Global Institute warns that we cannot wait for conclusive data on the effectiveness of obesity prevention strategies, such as taxing sugar-filled drinks, as there needs to be an “aggressive all-hands-on-deck approach” because the cost of failing is too highii. They suggest successful small-scale experiments should be quickly scaled up to improve public healthiii.
The MGI report advised that a major shift needs to occur in the way the food business sector advertises its productsiii. The report says it is important that new research be conducted, as losing weight is not easy, particularly for people living in obesogenic environments that encourage unhealthy eating choices and minimise the opportunities for exercisex .
The MGI report said that if we do not find solutions, almost half the adult world will be overweight or obese by 2030xi.
iWorld Health Organisation 2015, Obesity and overweight, viewed 19 February 2015,
iiAn, M., Wolf, A. 2014, ‘McKinsey global institute releases economic analysis on overcoming obesity’, DiaTribe, 17 December, viewed 18 February 2015,
iiiMcKinsey Global Institute 2014, Overcoming obesity: an initial economic analysis, viewed 30 March 2015,
ivDobbs, R., Sawers, C. 2014, ‘Obesity: A global economic issue’, VOX CEPR’s Policy Portal, 13 December, viewed 19 February 2015,
v‘Australian obesity rates climbing faster than anywhere else in the world, study shows’, ABC News, 29 May, viewed 30 March 2013,
viModi, Obesity in Australia, Monash University, viewed 10 April 2015,
viiHeart Foundation, Factsheet: Overweight and obesity statistics, viewed 10 April 2015,
viiiThe Boden Institute of Obesity, Nutrition, Exercise & Eating Disorders and the Menzies Centre for Health Policy, University of Sydney 2014, Obesity: Prevalence and trends in Australia, viewed 30 March 2015,
ixMedibank Health Solutions 2010, Obesity in Australia: financial impacts and cost benefits of intervention, viewed 10 April 2015,
xMagazine Monitor 2014, ‘What is an obesogenic environment?’, BBC News, 28 May, viewed 26 March 2015,
xiDobbs, R., Sawers C., Thompson, F., Manyika, J., Woetzel, J., Child, P., McKenna S., Spatharou, A. 2014, ‘How the world could better fight obesity’, McKinsey & Company, viewed 17 February 2015,