economic consequences of non-communicable diseases and injuries in russia
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Economic consequences of non-communicable diseases and injuries in Russia. European Health Forum Bad Gastein, 7 October 2005 Marc Suhrcke [email protected] WHO European Office for Investment for Health and Development (Venice) - PowerPoint PPT PresentationTRANSCRIPT
Economic consequences of non-communicable
diseases and injuries in Russia
European Health ForumBad Gastein, 7 October 2005
Marc [email protected]
WHO European Office for Investment for Health and Development (Venice)
Based on a report for the World Bank by:M Suhrcke, L Rocco, M McKee,
D Urban, S Mazzucco, A Steinherr
Sustainable economic growth without health in
Russia?
500
1000
1500
2000
2500
3000
1998 1999 2000 2001 2002 2003
64
65
66
67
68
GNI pc Atlas method current US$
Life expectancy at birth
Source: World Bank WDI 2005; WHO/EURO HFA database 2005
Highly unlikely to work!
In light of recent research and of the work undertaken for the present study!
Policy implication: Invest in health FOR economic development!
Outline of presentation
1. A conceptual framework2. Empirical evidence on the economic
consequences of NCDs and injuries• Past and current impact of adult ill-
health on economic outcomes• Projected economic benefits of
improving adult health
3. Conclusions and critique
Relevant channels from health to the economy: a simple
framework
ECONOMYHEALTH
Labour productivity
Labour supply
Education
Saving
Past and current impact of adult ill-health on economic
outcomesAbsenteeism from work due to illness
The impact of ill health on labour productivity and supply
The impact of chronic illness on early retirement
The impact of chronic illness on household incomesThe impact of alcohol consumption on job loss
The impact of premature death on the remaining household members
Annual days of absence due to illness per employee:
Russia vs. EU15
10.8
9.58.6
9.69.2
10.910.3
9.4
0
2
4
6
8
10
12
14
2000 2001 2002 2003
Male
Female
EU-15: 7.9(M: 6.9, F: 9.0)
Source: calculations based on RLMS rounds 2000-2003; EU-15 value is from ESWLC 2000
Costs of absenteeism due to illness in Russia
Source: Suhrcke/Rocco/McKee et al (2005), calculations based on RLMS absenteeism data
2003
Total wage loss (US$ billion)
60.96
Total wage loss as share in GDP
0.71%
Total production (GDP) loss (US$ billion)
112.87
Total production loss as share in GDP
1.31%
The impact of ill health on labour productivity and
supply Using various methodologies we find fairly robust results confirming that:
Among jobholders adult health appears to have had a significant and sizable impact on labour productivity, but less so on labour supplyEx.1: “Self-reported good health increases the wage rates by 22% for women and by 18% for men, compared to those who were not in good health”
Ex.2: “A workday missed due to illness reduces the wage rate by 5.5% for females and 3.7% for
males”
The impact of chronic illness on early retirement
Probability of retiring in subsequent period for average male individual:
Source: Panel logit regression as described in Suhrcke/Rocco/McKee et al. 2005
0.18 0.18 0.21
0.29
0.23
0.40
0.32
0.56
0.43
0.62
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
> 95th 75th - 95th 50th - 75th 25th - 50th < 25th
I ncome percentiles
Not chronically ill
Chronically ill
Richest Poorest
Projected economic benefitsof improving adult health
1) Definition of plausible future scenarios
2) Economic valuation of these future scenarios
1) Definition of plausible future scenarios for adult mortality due to NCD and injuries up to 2025:
Scenario 1: Reach today’s EU-15 rates by 2025Scenario 2: Annual percentage reduction of mortality rates at half the rate of scenario 1Scenario 3: No change in mortality rates
Mortality rates (per 100,000) due to NCDs and injuries (age
15-64): 3 scenarios
Source: calculations based on WHO Mortality Database
0
100
200
300
400
500
600
700
800
900
1000
Scenario 3
Scenario 2
Scenario 1
Benchmark EU-15 (2001)
2) Economic valuation of these future scenarios
a) Static economic benefits
b) Static welfare or “full income” benefits
c) Dynamic economic benefits
a) Static economic benefits
Share of benefits in GDP
NCDs 3.4%
Injuries 2.0%
NCDs + Injuries 5.0%
Scenario 3 (“reach EU15 by 2025”)
Note: future benefits discounted at 3%, and assumed growth rate of GDP pc of 3% p.a.Source: Suhrcke/Rocco/McKee et al 2005
c) Dynamic economic benefits
…assessing the impact of adult health on economic GROWTH!
…based on existing empirical relationship between adult mortality and economic growth worldwide!
The empirical relationship between adult mortality and economic growth worldwide
(1960-2000):Dependent variable: GDP per capita
Estimate 1 (OLS)
Estimate 2 (FE)
Lagged-GDP p.c. .86*** .65***
Lagged fertility rate
-.05 -.17***
Openness .16*** -
Lagged adult mortality rate
-.08** -.18***
R2 0.97 0.98
No. of observations 302 332
Source: Suhrcke/Rocco/McKee et al 2005Note: *** = 1%-significance level, ** = 2%-significance level
Applying these relationships to forecast the impact of adult mortality reduction in
Russia on economic growthPredicted GDP per capita based
on estimation 1 (OLS):
7,000
9,000
11,000
13,000
15,000
17,000
Scenario 3Scenario 2Scenario 1
Source: Suhrcke/Rocco/McKee et al 2005
Sustainable economic growth without health in
Russia?
500
1000
1500
2000
2500
3000
1998 1999 2000 2001 2002 2003
64
65
66
67
68
GNI pc Atlas method current US$
Life expectancy at birth
Source: World Bank WDI 2005; WHO/EURO HFA database 2005
Investing in adult health is a key determinant of economic outcomes at the individual and the macroeconomic level – in other countries AND in the Russian Federation
Given the major scope for adult health improvements there are indeed substantial health AND ECONOMIC benefits to be reaped from investing in adult health – most likely even more so in Russia than elsewhere
In light of the substantial magnitude of economic benefits, any well-designed efforts devoted to promote health in Russia – both in and outside the health system would produce a significant economic return