Transcript M Suhrcke - European Health Forum Gastein

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)
Based on a report for the World Bank by:
M Suhrcke, L Rocco, M McKee,
D Urban, S Mazzucco, A Steinherr
Venice does offer opportunities…
..but the challenges are many more
I.
II.
Sustainable economic growth
without health in Russia?
GNI pc Atlas method current US$
Life expectancy at birth
3000
2500
68
67
2000
66
1500
65
1000
500
64
1998
1999
2000
2001
2002
2003
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 framework
2. Empirical evidence on the economic
consequences of NCDs and injuries
•
•
Past and current impact of adult illhealth on economic outcomes
Projected economic benefits of
improving adult health
3. Conclusions and critique
1. A conceptual framework
Relevant channels from health
to the economy: a simple framework
Labour
productivity
Labour
supply
HEALTH
Education
Saving
ECONOMY
2. Empirical evidence on the
economic consequences of
NCDs and injuries
Past and current impact of adult
ill-health on economic outcomes
Absenteeism 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 incomes
The 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
14
Male
Female
12
10
10.9
10.8
9.2
10.3
9.6 9.4
9.5
8.6
8
EU-15: 7.9
(M: 6.9, F: 9.0)
6
4
2
0
2000
2001
2002
2003
Source: calculations based on RLMS rounds 2000-2003; EU-15 value is from ESWLC 2000
Costs of absenteeism due to
illness in Russia
2003
Total wage loss
(US$ billion)
Total wage loss as
share in GDP
Total production (GDP)
loss (US$ billion)
Total production loss
as share in GDP
60.96
0.71%
112.87
1.31%
Source: Suhrcke/Rocco/McKee et al (2005), calculations based on RLMS absenteeism data
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 supply
Ex.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:
0.7
0.62
Not chronically ill
0.6
0.56
Chronically ill
0.5
0.43
0.40
0.4
0.32
0.29
0.3
0.2
0.23
0.18 0.18 0.21
0.1
0
> 95th
Richest
75th - 95th
50th - 75th
25th - 50th
Income percentiles
Source: Panel logit regression as described in Suhrcke/Rocco/McKee et al. 2005
< 25th
Poorest
Projected economic benefits
of 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 2025
Scenario 2: Annual percentage reduction of
mortality rates at half the rate of scenario 1
Scenario 3: No change in mortality rates
Mortality rates (per 100,000) due
to NCDs and injuries (age 15-64):
3 scenarios
1000
Scenario 3
900
800
700
600
Scenario 2
500
400
Scenario 1
300
200
Benchmark EU-15 (2001)
100
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
20
25
0
Source: calculations based on WHO Mortality Database
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
Scenario 3 (“reach EU15 by 2025”)
Share of
benefits in GDP
NCDs
3.4%
Injuries
2.0%
NCDs + Injuries
5.0%
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
Lagged-GDP p.c.
Estimate 1
(OLS)
.86***
Estimate 2
(FE)
.65***
Lagged fertility rate
-.05
-.17***
Openness
.16***
-
Lagged adult
mortality rate
-.08**
-.18***
R2
0.97
0.98
No. of observations
302
332
Note: *** = 1%-significance level, ** = 2%-significance level
Source: Suhrcke/Rocco/McKee et al 2005
Applying these relationships to forecast the
impact of adult mortality reduction in Russia
on economic growth
Predicted GDP per capita based
on estimation 1 (OLS):
17,000
Scenario 3
Scenario 2
Scenario 1
15,000
13,000
11,000
9,000
Source: Suhrcke/Rocco/McKee et al 2005
20
25
20
20
20
15
20
10
20
05
20
00
7,000
3. Conclusions and critique
Sustainable economic growth
without health in Russia?
GNI pc Atlas method current US$
Life expectancy at birth
3000
2500
68
67
2000
66
1500
65
1000
500
64
1998
1999
2000
2001
2002
2003
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
Critique