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How to Estimate Productivity Costs in Economic Evaluations

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Abstract

Productivity costs are frequently omitted from economic evaluations, despite their often strong impact on cost-effectiveness outcomes. This neglect may be partly explained by the lack of standardization regarding the methodology of estimating productivity costs. This paper aims to contribute to standardization of productivity cost methodology by offering practical guidance on how to estimate productivity costs in economic evaluations. The paper discusses the identification, measurement and valuation of productivity losses. It is recommended to include not only productivity losses related to absenteeism from and reduced productivity at paid work, but also those related to unpaid work. Hence, it is recommended to use a measurement instrument including questions about both paid and unpaid productivity, such as the iMTA Productivity Cost Questionnaire (iPCQ) or the Valuation of Lost Productivity (VOLP). We indicate how to apply the friction cost and the human capital approach and give practical guidance on deriving final cost estimates.

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Notes

  1. Note that the health of the patient can also affect the productivity of informal caregivers. How to value caregivers time loss can be found elsewhere [60].

  2. In this paper, absenteeism is considered to encompass early retirement, a reduction in routine work hours or losing one’s job.

  3. For an elaborate description of the concept of presenteeism see Brooks et al. [23]

  4. A summary of the key recommendations made in this paper is provided in the electronic supplementary material.

  5. Note that this recommendation refers to economic evaluations from the societal perspective. In the United States, for instance, evaluations are regularly conducted from an employer perspective. In such cases, productivity losses related to unpaid work do not need to be included.

  6. Although the development of the iPCQ makes the HLQ somewhat outdated, it can still be used to calculate productivity costs for inclusion in economic evaluation.

  7. The friction costs are therefore limited here to time costs (the time it takes to hire and train a replacement worker. Consequently, other costs made to replace a worker, for instance recruitment costs, are not directly accounted for. If such costs are deemed substantial, they may be added.

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Acknowledgements

We would like to thank Clazien Bouwmans, Leona Hakkaart-van Roijen and Marc Koopmanschap for their useful comments on earlier drafts of this paper. For reasons of transparency, we indicate that both MK and WB are proponents of the friction cost method and were both involved in the development of the iPCQ questionnaire. The authors have no other conflicts of interest to declare. MK was primarily responsible for writing the manuscript in close cooperation with WB. Both authors read, edited, and approved the final manuscript. MK is the overall guarantor for the content.

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Authors and Affiliations

  1. Department of Health Policy and Management, Erasmus University, P.O. Box 1738, 3000 DR, Rotterdam, The Netherlands

    Marieke Krol & Werner Brouwer

  2. Institute for Medical Technology Assessment, Erasmus University, Rotterdam, The Netherlands

    Werner Brouwer

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  1. Marieke Krol
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Correspondence to Marieke Krol.

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Krol, M., Brouwer, W. How to Estimate Productivity Costs in Economic Evaluations. PharmacoEconomics 32, 335–344 (2014). https://doi.org/10.1007/s40273-014-0132-3

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