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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 Forum Bad Gastein, 7 October 2005 Marc Suhrcke msu@ihd.euro.who.int WHO European Office for Investment for Health and Development (Venice)

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Economic consequences of non-communicable diseases and injuries in Russia

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  1. Economic consequences of non-communicable diseases and injuries in Russia European Health ForumBad Gastein, 7 October 2005 Marc Suhrckemsu@ihd.euro.who.int 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

  2. Venice does offer opportunities…

  3. ..but the challenges are many more I.

  4. II.

  5. Sustainable economic growth without health in Russia? Source: World Bank WDI 2005; WHO/EURO HFA database 2005

  6. 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!

  7. 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

  8. 1. A conceptual framework

  9. Relevant channels from health to the economy: a simple framework Labour productivity Labour supply HEALTH ECONOMY Education Saving

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

  11. 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

  12. 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

  13. Costs of absenteeism due to illness in Russia Source: Suhrcke/Rocco/McKee et al (2005), calculations based on RLMS absenteeism data

  14. 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”

  15. 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

  16. Projected economic benefitsof improving adult health 1) Definition of plausible future scenarios 2) Economic valuation of these future scenarios

  17. 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

  18. Mortality rates (per 100,000) due to NCDs and injuries (age 15-64): 3 scenarios Source: calculations based on WHO Mortality Database

  19. Economic valuation of these future scenarios a) Static economic benefits b) Static welfare or “full income” benefits c) Dynamic economic benefits

  20. 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

  21. 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!

  22. 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

  23. 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

  24. 3. Conclusions and critique

  25. Sustainable economic growth without health in Russia? Source: World Bank WDI 2005; WHO/EURO HFA database 2005

  26. 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

  27. Critique

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