Most studies that have focused on the costs of obesity have ignored the direct effects of obesity-related patterns of diet and physical activity. This study reviews the full effects of each component – poor dietary and physical activity patterns and obesity – on morbidity, mortality and productivity. The direct healthcare costs are based on a review of the effects of these factors on key diseases and the related medical care costs of each disease. The indirect costs on reduced disability, mortality and sickness during the period of active labour force participation prior to retirement are also examined. A case study is prepared for China to provide some guidance in the utilization of this review for economic analysis of obesity. The case study shows that the indirect costs are often far more important than the direct medical care costs. The Chinese case study found that the indirect effects of obesity and obesity-related dietary and physical activity patterns range between 3.58% and 8.73% of gross national product (GNP) in 2000 and 2025 respectively.