PC3 Breast and Prostate Cancer Productivity Costs: A Comparison of the Human Capital Approach and Friction Cost Approach

Abstract

Productivity costs constitute a substantial proportion of the total societal costs associated with cancer. Cancer patients may leave the workforce permanently post-diagnosis, take time off during treatment and/or return to work with reduced hours or die prematurely; the associated productivity costs have rarely been considered. We applied the dominant human capital approach (HCA) and the emerging friction cost approach (FCA) to estimate breast and prostate cancer productivity costs in Ireland in 2008. Data from a survey of breast and prostate cancer patients (n=358) was combined with population-level survival estimates (from the population-based National Cancer Registry) and a national wage dataset to calculate costs of temporary disability (cancer-related work absence), permanent disability (workforce departure, reduced working hours) and premature mortality, using the HCA and FCA. Sensitivity analyses were conducted for key parameters: GNP growth and discount rates for HCA and friction period and labour elasticity for FCA. According to the HCA, productivity costs per person amounted to €193,425 for breast and €109,154 for prostate cancer. FCA per person costs were €8103 for breast and €8205 for prostate cancer. The HCA generated higher costs for younger patients (breast cancer) due to greater lifetime earning potential. In contrast FCA resulted in higher productivity costs for older male patients (prostate) commensurate with higher earning capacity over a shorter time period. Reduced working hours post-cancer was a key driver of total HCA productivity costs. HCA costs were sensitive to assumptions about discount and growth rates. FCA costs were sensitive to assumptions about the friction period. This study highlights the importance of choosing the correct valuation method for chronic long-term illnesses such as cancer, being explicit about assumptions, and considering a range of cost sub-components, including those due to reduced working hours.