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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.
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“Data for the assessment of the economic evaluation reporting standards were extracted using the Consolidated Health Economic Evaluation Reporting Standards (CHEERS) 2022 statement.”
From Productivity outcomes from chronic pain management interventions in the working age population; a systematic review (2024) · cites this paper as [20]
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“The human capital approach was used for estimating sick leave cost [34].”
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“The IPCQ was used to calculate the total productivity loss due to both absenteeism (days on sick leave) and presenteeism (days with productivity loss while at work) based on the friction cost approach [17].”
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“Intervention-related unit costs were based on recorded trial costs; childcare costs were informed by relevant surveys [20, 21]; health care, social care and community service costs were sourced from published UK sources [22, 23]; and absent workday productivity losses were estimated using the human capital approach [2…”
MethodEconomic burden of chronic obstructive pulmonary disease in Morocco: a cost of illness study
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“Productivity costs were computed using the human capital approach [31].”
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“Indirect costs in terms of work loss were estimated by adopting the human capital approach, which is a common method for the valuation of productivity losses.[14,15] This method assesses the value of lost production based on the lost average income of a gainfully employed person.”
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“Indirect cost, defined as work time loss of parents [27], was computed based on several assumptions.”
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“For practical calculations, Koopmanschap and Rutten (1996) suggested that the replacement period for a worker had a mean of 3 months.”
BackgroundMethodEconomic analyses and lung cancer.
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Employer survey to estimate the productivity friction period
Manipis, K., Goodall, S., Hanly, P. A., Viney, R. C., & Pearce, A. M. (2021) · The European Journal of Health Economics · doi:10.1007/s10198-020-01250-4 · Cited by 2
“Aside from the productivity that is lost during a friction period, there are additional costs that may be incurred in replacing a sick worker [2].”
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“38 39 Studies that estimated both direct and indirect costs of obesity found productivity-related costs higher than the direct healthcare costs.”
Manipis, K., Cronin, P., Street, D. J., Church, J., Viney, R. C., & Goodall, S. (2025) · PharmacoEconomics · doi:10.1007/s40273-024-01458-9 · Cited by 3
“The firm also bears additional costs associated with replacing a worker, which include recruitment decisions and training costs [16, 61].”
InfluentialBENEFITS OF PHARMACEUTICAL INNOVATION: THE CASE OF SIMVASTATIN IN CANADA
Thành, N. X., Chuck, A. W., Ohinmaa, A. E., & Jacobs, P. (2012) · International Journal of Technology Assessment in Health Care · doi:10.1017/s0266462312000499 · Cited by 2
“We estimated the costs of lost productivity using a human capital approach (17).”
BackgroundMethod[Economic aspects of ambulatory and inpatient treatment of HIV positive patients].
Stoll, M., & Schmidt, R. E. (2003) · PubMed · Cited by 2
How Health Affects Productivity
Bevan, S., & Cooper, C. L. (2021) · Emerald Group Publishing Limited eBooks · doi:10.1108/978-1-83867-499-120211002 · Cited by 2
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Ökonomische Aspekte der ambulanten und stationären Behandlung HIV-Infizierter
Stoll, M., & Schmidt, R. E. (2003) · Der Internist · doi:10.1007/s00108-003-0922-8 · Cited by 2
Estimating the Indirect Costs of Smoking Using the Friction Cost Method
Koopmanschap, M. A. (1999) · Studies in risk and uncertainty · doi:10.1007/978-94-011-4415-5_4 · Cited by 2
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“Indirect costs were defined as those related to absenteeism, presenteeism, early retirement, or forced unemployment due to the disease burden, valued using the human capital approach [29, 30].”
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“• Transportation costs were estimated using average round‐ trip fares reported by patients for hospital visits [24, 25].”
Rovira, P., Lai, T., Reile, R., Hassan, A. S., & Rehm, J. T. (2026) · European Journal of Public Health · doi:10.1093/eurpub/ckaf265 · Cited by 1
“For productivity losses due to premature mortality, we followed a human capital approach [29].”
Metadata
- Authors
- Koopmanschap, M. A., & Rutten, F. F. H.
- Affiliations
- Erasmus University Rotterdam (NL)
- Corresponding author
- Koopmanschap, Marc A.
- Venue
- PharmacoEconomics
- Published
- 1996-11
- Volume
- 10
- Issue
- 5
- Pages
- 460-466
- ISSN
- 1170-7690 (ISSN-L)
- OpenAlex
- W1980604588
- Cited by
- 358
- References
- 9
- Citations by year
- 2026: 7 · 2025: 5 · 2024: 8 · 2023: 2 · 2022: 17 · 2021: 9 · 2020: 8 · 2019: 10 · 2018: 10 · 2017: 19 · 2016: 11 · 2015: 11 · 2014: 14 · 2013: 12 · 2012: 8
- FWCI
- 22.73
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- PharmacoEconomics (publishedVersion)
- PubMed (publishedVersion)
- EUR Research Repository (Erasmus University Rotterdam) (publishedVersion)
- EUR Research Repository (Erasmus University Rotterdam) (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Health Systems, Economic Evaluations, Quality of Life
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic and Environmental Valuation
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Global Health Care Issues
- Keywords
- economic burden, human capital approach, friction cost method, productivity loss, economic evaluation, labor shortage, cost estimation
- MeSH terms
- Cost-Benefit Analysis, Delivery of Health Care, Humans, Disease Management
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