10 Jan The Economic Cost of Inadequate Sleep
The financial and non-financial costs associated with inadequate sleep are substantial. In the August edition of the journal ‘SLEEP’ the team behind the Australian ‘Sleep Health Foundation’ estimated that in the 2016-2017 financial year the total financial cost to be $17.88 billion (US), representing 1.55% of Australian gross domestic product.
‘Financial costs’ were defined as those associated with health care, informal care provided outside healthcare sector, productivity losses, nonmedical work and vehicle accident costs, deadweight loss through inefficiencies relating to lost taxation revenue and welfare payments.
‘Nonfinancial costs’ were defined as loss of well-being. The estimated nonfinancial cost of $27.33(US) billion represents 4.6 per cent of the total Australian burden of disease for the year.
Recent surveys demonstrate that inadequate sleep is a substantial and growing problem in Australia and in nations with equivalent economies and demographics.
This inadequacy is due in part to untreated sleep disorders and in part to insufficient sleep because of work or other demands or lifestyle choice. It comes at the expense of compromised cognitive and psychomotor function, mood, and physical and emotional well-being. These compromises adversely affect safety, productivity, and health and have substantial associated economic costs.
The estimated overall cost of inadequate sleep in Australia in 2016–2017 (population: 24.8 million) was $45.21 billion. The financial cost component was $17.88 billion, comprised of as follows:
- Direct health costs of $160 million for sleep disorders and $1.08 billion for associated conditions – specifically expenditure for sleep disorders and other sleep-associated health problems, including hospital care, health practitioners, pharmaceuticals, diagnostic tests, health aids and appliances, aged care, research, community and public health, and capital and administration.
The estimated health system costs of sleep disorders and conditions attributed to inadequate sleep for the 2016–2017 financial year were $1.24 billion, comprising the following:
(a) sleep disorders $158.3 million;
(b) congestive cardiac failure $9.1 million;
(c) coronary artery disease $77.8 million;
(d) stroke $47.5 million;
(e) type 2 diabetes $12.1 million;
(f) depression $271.8 million;
(g) medical costs of workplace injuries $423.3 million; and
(h) medical costs of motor vehicle accidents $238.9 million.
- Productivity losses of $12.19 billion – where four productivity losses were considered:
(a) reduced employment through early retirement or other workforce withdrawal;
(b) temporary absenteeism though time off work;
(c) presenteeism, whereby the worker is at work but is less productive; and
(d) premature mortality
Overall, the costs were $5.22 billion reduced employment, $0.61 billion premature death, $1.73 billion absenteeism, and $4.63 billion presenteeism.
- Nonmedical accident costs of $2.48 billion – specifically related to legal expenses, costs of investigation, aids and modifications to the home, respite services, travel costs and delays, correctional services, vehicle unavailability and repairs, towing, insurance administration, nonvehicle property damage, and fire and emergency services.
- Informal care costs of $0.41 billion – costs attributed to inadequate sleep with increased personal, household, and other care needs. Costs were based on the following care requirements:
(a) motor vehicle accidents, the average care requirement estimated to be 4.5 hr per week;
(b) workplace injuries, the average care requirement estimated to be 3.7 hr per week,
(c) cardiovascular disease (cerebrovascular disease, coronary artery disease, and congestive heart failure), the average care requirement estimated to be 1.1 hr per week;
(d) type 2 diabetes, the average care requirement estimated to be 0.1 hr per week
However, there is a lack of adequate data to calculate of informal care costs for mental heath.
- Deadweight loss of $1.56 billion – which reflects the cost of disability support pension, pension supplement and rent assistance, reduced income and consumption taxation revenue, plus reduced company tax revenue due to lost earning.
This important study provides a far more detailed economic analyses of the cost of sleep disorders and of productivity losses associated with poor sleep in Australia. Given the estimated total cost of inadequate sleep in Australia in 2016–2017 was $45.21 billion, this equates to ~$6,117 (US) per person affected in both financial and wellbeing costs.
This is a substantial cost to the economy. The Australian population in 2016–2017 was 24.8 million people and so, assuming they are generalizable across economies with similar (Organization for Economic Cooperation and Development) characteristics, the various costs would have to be adjusted for the population under consideration.
It is critical that such economic evaluations are done, as economic decisions demand them. As the authors noted it is a basic political and administrative responsibility to allocate resources based on costs. In public health expenditure terms, sleep health languishes behind issues such as healthy diet, regular exercise, moderation of alcohol intake, and smoking cessation as a priority for attention and expenditure. In the meantime, the pressures on sleep health are increasing, both through aging and weight-related increases in sleep disorders, as well as demands from competing work, family, social, and social media activities. The data in this report illustrate that, besides their impact on individual and societal well-being, there is a substantial monetary cost to these issues.
This new data, will hopefully assist in addressing the immediate impact of sleep health, and influence longer term economic health, underlining the importance of good sleep health to national well-being.
Reference: Sleep, Volume 41, Issue 8, 1 August 2018, David Hillman et al.