Economic Consequences of NCDs in Low and Middle Income Countries

Presenter: Marc Suhrcke, University of East Anglia

Abstract

Assessing the economic costs or consequences of NCDs in low- and middle-income countries has not been a major emphasis of research. We present some of our recent work intended to close part of this gap. We assess the economic consequences of NCDs (or its sub-categories) along at least three different dimensions:

1) Microeconomic costs: we assess the causal impact of chronic illness and/or risk factors on various labour market outcomes, especially earnings/wages and labour supply, using predominantly IV approaches. In particular, we present new microeconomic evidence from at least the following countries: Argentina, Egypt, China, India, Tajikistan, and Tunisia. Although the magnitude of the impact differs across countries and indicators, the overall fairly robust finding is that chronic illness significantly harms labour market performance.

2) Macroeconomic costs: To assess the potential growth impact of NCDs we start from a growth regression framework and examine the impact of cardiovascular disease mortality on subsequent growth in a worldwide sample of countries, extending the empirical model used by Lorentzen et al. (2008). We attempt to circumvent the involved endogeneity problems by using an IV estimate, and we fill in the (large) gaps in CVD data by estimates. We find a significant, if not huge, negative impact of CVD mortality on subsequent growth in real p.c. GDP.

3) Welfare costs: we follow the approach used by Becker et al. (2005) and Soares (2007) to assess the value of a) past reductions in CVD mortality and b) of future reductions of CVD mortality in different scenarios. We find that – not surprisingly – the economic value of reductions in CVD mortality far exceeds those estimates emerging from other, more limited approaches.

Overall, there is a lot to suggest that the expected economic benefits of addressing premature NCDs – measured in different ways – merit greater attention by policymakers than hitherto given. The need to find (more) cost-effective means preventing and controlling the NCD burden in low and middle income countries therefore becomes even more pressing.