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)

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Economic consequences of non communicable diseases and injuries in russia

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


Venice does offer opportunities

Venice does offer opportunities…


But the challenges are many more

..but the challenges are many more

I.


Economic consequences of non communicable diseases and injuries in russia

II.


Sustainable economic growth without health in russia

Sustainable economic growth without health in Russia?

Source: World Bank WDI 2005; WHO/EURO HFA database 2005


Economic consequences of non communicable diseases and injuries in russia

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

A conceptual framework

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

Conclusions and critique

Outline of presentation


1 a conceptual framework

1. A conceptual framework


Relevant channels from health to the economy a simple framework

Relevant channels from health to the economy: a simple framework

Labour productivity

Labour supply

HEALTH

ECONOMY

Education

Saving


2 empirical evidence on the economic consequences of ncds and injuries

2. Empirical evidence on the economic consequences of NCDs and injuries


Past and current impact of adult ill health on economic outcomes

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

Annual days of absence due to illness per employee: Russia vs. EU15

Source: calculations based on RLMS rounds 2000-2003; EU-15 value is from ESWLC 2000


Costs of absenteeism due to illness in russia

Costs of absenteeism due to illness in Russia

Source: Suhrcke/Rocco/McKee et al (2005), calculations based on RLMS absenteeism data


The impact of ill health on labour productivity and supply

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

The impact of chronic illness on early retirement

Probability of retiring in subsequent period for average male individual:

Richest

Poorest

Source: Panel logit regression as described in Suhrcke/Rocco/McKee et al. 2005


Projected economic benefits of improving adult health

Projected economic benefitsof improving adult health

1) Definition of plausible future scenarios

2) Economic valuation of these future scenarios


Definition of plausible future scenarios for adult mortality due to ncd and injuries up to 2025

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

Mortality rates (per 100,000) due to NCDs and injuries (age 15-64): 3 scenarios

Source: calculations based on WHO Mortality Database


Economic valuation of these future scenarios

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

a) Static economic benefits

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

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!


Economic consequences of non communicable diseases and injuries in russia

The empirical relationship between adult mortality and economic growth worldwide (1960-2000):

Note: *** = 1%-significance level, ** = 2%-significance level

Source: Suhrcke/Rocco/McKee et al 2005


Economic consequences of non communicable diseases and injuries in russia

Applying these relationships to forecast the impact of adult mortality reduction in Russia on economic growthPredicted GDP per capita based on estimation 1 (OLS):

Source: Suhrcke/Rocco/McKee et al 2005


3 conclusions and critique

3. Conclusions and critique


Sustainable economic growth without health in russia1

Sustainable economic growth without health in Russia?

Source: World Bank WDI 2005; WHO/EURO HFA database 2005


Economic consequences of non communicable diseases and injuries in russia

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

Critique


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