How to Estimate Productivity Costs in Economic Evaluations

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.