The cost of racial discrimination

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Until now, it’s been impossible to calculate the cost of racial discrimination, but research conducted by the Alfred Deakin Institute for Citizenship and Globalisation (ADI) shows that it was estimated to cost $44.9 billion ($3.6 per cent of GDP) every year from 2001 to 2011. The PhD by ADI researcher Dr Amanuel Elias indicates that a number of microeconomic and macroeconomic factors have contributed to the figure.

How is racial discrimination calculated?  

According to Dr Elias, microeconomic costs of racial discrimination are indirect costs associated with the labour market, while macroeconomic factors include the impact of physical and mental health conditions that occur as a result of racial discrimination. ‘Once we know what racial discrimination costs society, we have a strong information base from which to launch an economic argument for making a reasonable effort to reduce racial discrimination,’ Dr Elias says.

He assessed national and state data to understand the frequency with which Australians experienced racial discrimination, and looked at almost 300 global health studies to conclude that depression, anxiety, post-traumatic stress disorder and psychological disorders are consistent results of racism. Dr Elias used this information to convert the number of healthy years of life lost, which he describes as Disability Adjusted Life Years (DALYs), into a monetary value. One DALY equates to one year of healthy life.

Using this formula he established that 285,228 DALYs are lost every year in Australia as a result of racial discrimination. ‘The overall economic cost of racial discrimination to an economy can serve as a benchmark to scope the size of anti-discrimination intervention,’ he says.

'Once we know what racial discrimination costs society, we have a strong information base from which to launch an economic argument for making a reasonable effort to reduce racial discrimination.'

Dr Amanuel Elias,
Deakin University

What can be done to curb racial discrimination?

Dr Elias believes that racism is preventable and claims that being able to put a dollar value on the implications helps anti-discrimination advocates mount a campaign. Such interventions might include campaigns that promote the benefits of diversity in society. He says such public awareness activities can successfully reduce racist attitudes and acts. In 2011, the Australian Government committed to developing a national anti-racism strategy. The result was, ‘Racism. It Stops With Me,’ which used high profile celebrities to promote more accepting attitudes.

But there is still much work to be done, given that Australia’s policy on asylum seeker resettlement promotes xenophobia. ‘In countries like Australia, where subtle interpersonal racism exists along with some forms of institutional discrimination, anti-discrimination interventions require relatively moderate spending,’ Dr Elias concludes.

cost of racism infographic

 

 

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Dr Amanuel Elias
Dr Amanuel Elias

Researcher, Alfred Deakin Institute for Citizenship and Globalisation
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