A practical guide for calculating indirect costs of disease

Abstract

There may be some discussion about whether indirect costs should be taken into account at all in an economic appraisal, but there is certainly considerable debate about the proper way of estimating these costs. This reviews offers a practical guide for quantifying and valuing these indirect costs of disease, both at an aggregated level of general cost of illness studies, and in an economic appraisal of specific healthcare programmes. Two methods of calculating these costs are considered: the traditional human capital approach, and the more recently developed friction cost method. The former method estimates the potential value of lost production as a result of disease, whereas the latter method intends to derive more realistic estimates of indirect costs, taking into account the degree of scarcity of labour in the economy. All necessary steps in the estimation procedure and the data required at various points will be described and discussed in detail.