PMH16 - Estimating the Economic Impact Due to Productivity Losses of Diabetes and Major Depressive Disorder in Singapore: Human Capital Versus Friction cost Approaches

Abstract

To estimate and compare the costs associated with lost productivity due to type 2 diabetes (T2D) and major depressive disorder (MDD) in Singapore using the Human Capital (HC) and Friction Cost (FC) approaches. Annual short-term (absenteeism-related) and overall long-term (mortality-related) productivity losses were calculated for the estimated 139,389 patients with T2D and 63,551 patients with MDD of working age in Singapore. Short-term losses using the HC approach were calculated by multiplying mean additional days of absence per year per patient for T2D (1.3 days) or MDD (3.6 days) by the mean daily wage (S$149.77) and the total number of patients. The FC approach introduced an elasticity factor of 0.8 in calculating short-term losses. To calculate long-term productivity losses due to mortality, excess deaths were estimated by applying disease-specific mortality ratios to Singapore national mortality data for working age patients. For the HC approach, excess deaths were then multiplied by the average number of pre-retirement years of work lost (assumed retirement age of 69) and the mean annual wage (S$53,916.00). For the FC approach, a friction period of 6 months and a fixed cost of S$10,000 for hiring and training a new worker were assumed. Annual short-term productivity losses due to T2D were S$27.1m (HC approach) and S$21.7m (FC approach) and due to MDD were S$34.3m (HC) and S$27.4m (FC). Long-term productivity losses due to mortality were S$112.2m (HC) and S$8.8m (FC) due to T2D and S$85.8m (HC) and S$5.6m (FC) due to MDD. Productivity losses due to T2D and MDD constitute a substantial cost to the Singaporean economy. The calculation approach (HC vs FC) can have a substantial impact on the estimates. Incorporation of productivity losses into decision-making for healthcare interventions would need to carefully consider which approach is most appropriate for Singapore.