The health and economic benefits

Definitions of key terms
Term	Meaning
Arcadian ideal	Countries comparable to Australia, where the prevalence of a risk factor is lower.
Attributable burden	The estimated effects on population health, economic and financial outcomes of a risk factor at current prevalence estimates.
Avoidable burden	The estimated net change in population health, economic and financial parameters (reported savings arising from mortality, morbidity, absenteeism, participation rates) if feasible reductions in risk factor prevalence could be achieved
Cost offsets	These are made up of reductions in the costs of future health care delivery (for example, hospital admissions, General Practitioner visits, pharmaceuticals and allied health services) which can be avoided by reductions in the number of cases of disease. Cost offsets are the estimated resources consumed in the diagnosis, treatment and care of preventable events that could become available for other uses. These can be considered as ‘opportunity costs’. However, such estimates are only indicative of financial savings and should be interpreted with caution because they are not estimates of immediately realisable financial savings.
Disability Adjusted Life Year	The Disability Adjusted Life Year is a summary measure of population health that captures the effects of premature mortality and morbidity associated with disease and injury.
Discount Rate	A 3% discount rate was applied to ensure future costs and benefits were expressed in the net present value. See Net present value.
Economic benefits	Measures of economic gain estimated in this project were decreases in short and long-term absenteeism, decrease in premature retirements and increases in household production (e.g. shopping, cleaning and child care) and leisure activities, associated with changes in disease incidence and deaths, over a time period.
Feasible reduction	A reduction in risk factor prevalence that is consistent with the current evidence for that risk factor within Australia and overseas.
Financial benefits	The valuation in dollar terms of the estimated economic benefits. The potential opportunity cost savings that include a value for health sector offsets, productivity impacts in terms of household and workforce participation, taxation, recruitment and training costs and leisure time. These are not estimates of immediately realisable cash savings.
Friction Cost Approach	In the context of productivity, the friction cost method determines the costs to employers of losing workers due to illness and conversely the savings to employers from health improvements, as well as lost individual income during the friction period. The friction period is the time it takes to recruit and train a new worker from the ranks of the unemployed to replace the lost worker who has either died or is unable to work due to illness (Koopmanschap et al. 1995).
Health gains	Quantified as the incident (new) cases of disease and deaths that could be prevented and the potential Disability Adjusted Life Years that could be averted (saved), over a time period, from reductions in the prevalence of a risk factor.
Health sector costs	The cost associated with: hospital care (admitted and non-admitted); aged care homes; out-of-hospital medical services; pharmaceuticals (prescription and over-the-counter drugs); other professional services (e.g. optometry); dental services; and research.

Health sector offsets	These are made up of reductions in the costs of future health care delivery (for example, hospital admissions, General Practitioner visits, pharmaceuticals and allied health services) which can be avoided by reductions in the number of cases of disease. Cost offsets are the estimated resources consumed in the diagnosis, treatment and care of preventable events that could become available for other uses. These can be considered as ‘opportunity costs’. However, such estimates are only indicative of financial savings and should be interpreted with caution because they are not estimates of immediately realisable financial savings.
Household production	The non-paid hours of time allocated to household duties of cooking, shopping, cleaning, maintenance etc. This is often referred to in the literature as non-market based production, since it is not traded in the usual way as a marketable item.
Human Capital Approach	In the context of productivity, the human capital method is based on estimated output losses from cessation or reduction of production due to morbidity and mortality; or conversely, from gains made in human capital (both in terms of workforce participation and productivity increases) due to investments in health care (Sapsford and Tzannatos 1993). This is valued as gross employee earnings in the case of the paid workforce.
Ideal target	The feasible risk factor prevalence reduction target. This ideal target was established: by selecting a country comparable to Australia with a lower risk factor prevalence (Arcadian ideal); or according to expert opinion, current guidelines and/or relevant literature.
Net present value	The value of benefits (income or health benefits), which are expected to be received in the future, at a specified reference year (2008 in this analysis), taking the time value of returns into account (discounted by 3% in this project).
Not in the labour force	Individuals not currently active in, or looking for, employment. For example, students / retirees.
Opportunity cost	Opportunity costs are defined as the value of time or any other ‘input’ in its highest value alternative use. Therefore, opportunity costs represent the lost benefit of not selecting the next best alternative use of the resource inputs.
Population Attributable Risk Fraction	The proportion by which the incidence rate of a disease could be reduced over a time period, if the risk factor was to reach a theoretical minimum, assuming causation between risk factor and disease.
Preferred conservative estimate	Estimates calculated using the Friction Cost Approach, as opposed to the Human Capital Approach, are the preferred conservative estimates for valuing productivity costs in this study. As a number of assumptions needed to be made for modelling to occur, the FCA is preferred as it represents a more conservative estimate of the production gain likely to follow a reduction in risk behaviour.
Productivity gains/losses	Reflect changes in workforce participation and absenteeism associated with health status
Progressive target	The mid-point between the current prevalence of a risk factor and the ideal target prevalence for risk factor reduction. For example, the current prevalence of tobacco smoking in Australia is 23%, the ideal prevalence target is 15% and therefore, the progressive target is 19%.

Reference year	The year used for determination and valuation of costs, benefits and population health impact.
Replacement costs	Valued at the average hourly rates for commercially available domestic services and child care. See household production.
Socio-Economic Indexes For Areas	This suite of indexes ranks geographic areas across Australia in terms of their socio-economic characteristics (from most disadvantaged to least disadvantaged) on the basis of several factors which include education, income and others (Australian Bureau of Statistics 2008a).
Standard drink	A standard drink is equal to 10g (12.5ml) of alcohol (National Health and Medical Research Council 2001).
Threshold analysis	An analytic method used to provide evidence for priority setting and policy decisions, including resource allocation and research priority decisions. It is employed in decision contexts when some information is available, but other important variables are missing.
Workforce participants	People working part-time, full time or looking for work.

Definitions of risk factors used in this project as per the 2004-05 National Health Survey (Australian Bureau of Statistics 2006)
Alcohol consumption	Long term high risk alcohol consumption: Greater than 75ml of alcohol consumed per day for men, and greater than 50ml of alcohol consumed per day for women.
	Long term low risk alcohol consumption: Less than 50ml of alcohol consumed per day for men, and less than 25ml of alcohol consumed per day for women.
High body mass index	Obese or overweight: BMI greater than 25, based on self-reported height and weight.
	Normal weight: BMI less than 25, based on self-reported height and weight (including underweight).
Inadequate fruit and vegetable consumption	Inadequate fruit and vegetable consumption: Consumption below the recommended minimum of 2 serves fruit and 5 serves vegetables daily.
	Adequate consumption: Consumption at or above the recommended minimum of 2 serves fruit and 5 serves vegetables daily.
Intimate partner violence	High psychological distress has been used as a proxy for current exposure to intimate partner violence: High or very high levels of psychological distress (score 22-50 on the Kessler Psychological Distress Scale -10).
	Moderate psychological distress has been used as a proxy for past exposure to intimate partner violence: Moderate levels of psychological distress (score 10-21 on the Kessler Psychological Distress Scale -10).
Physical inactivity	Inactive: Sedentary or low activity level.
	Active: Moderate to high activity level.
Tobacco smoking	Current smokers: Persons who smoke tobacco on a regular or irregular daily basis.
	Ex-smokers: Persons who no longer smoke on a regular or irregular basis.