Some adjustments to the human capital and the friction cost methods
Antonis Targoutzidis ()
Additional contact information
Antonis Targoutzidis: Hellenic Institute for Occupational Health and Safety (ELINYAE)
The European Journal of Health Economics, 2018, vol. 19, issue 9, 1225-1228
Abstract The cost of lost output is a major component of the total cost of illness estimates, especially those for the cost of workplace accidents and diseases. The two main methods for estimating this output, namely the human capital and the friction cost method, lead to very different results, particularly for cases of long-term absence, which makes the choice of method a critical dilemma. Two hidden assumptions, one for each method, are identified in this paper: for human capital method, the assumption that had the accident not happened the individual would remain alive, healthy and employed until retirement, and for friction cost method, the assumption that any created vacancy is covered by an unemployed person. Relevant adjustments to compensate for their impact are proposed: (a) to depreciate the estimates of the human capital method for the risks of premature death, disability or unemployment and (b) to multiply the estimates of the friction cost method with the expected number of job shifts that will be caused by a disability. The impact of these adjustments on the final estimates is very important in terms of magnitude and can lead to better results for each method.
Keywords: Cost of illness; Human capital; Friction cost; Vacancy chains (search for similar items in EconPapers)
JEL-codes: I15 J39 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s10198-018-0969-z Abstract (text/html)
Access to the full text of the articles in this series is restricted.
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:spr:eujhec:v:19:y:2018:i:9:d:10.1007_s10198-018-0969-z
Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10198/PS2
Access Statistics for this article
The European Journal of Health Economics is currently edited by J.-M.G.v.d. Schulenburg
More articles in The European Journal of Health Economics from Springer, Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().