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Worker replacement and cost-benefit analysis of life-saving health care programs, a precautionary note

Published online by Cambridge University Press:  22 January 2014

Philippe Tessier ,
Hélène Sultan-Taïeb  and
Thomas Barnay
Philippe Tessier*
Affiliation:
Faculté de Médecine, Université de Nantes, SPHERE (EA 4275), France
Hélène Sultan-Taïeb
Affiliation:
Université du Québec à Montréal (UQAM), Centre de recherche interdisciplinaire sur la biologie, la santé, la société et l'environnement (CINBIOSE), Québec; Laboratoire d’Économie Gestion (UMR CNRS 5118), Université de Bourgogne, France
Thomas Barnay
Affiliation:
Université Paris-Est Créteil (UPEC), ERUDITE, CNRS TEPP (FR 3435), France
*
*Corresponding to: Philippe Tessier, Université de Nantes, Faculté de Médecine, 1 rue Gaston Veil, 44035 Nantes Cedex 1, France. Email: [email protected]
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Abstract

The assumption according to which ill individuals can be replaced at work that underpins the ‘friction cost method’ (FCM) to value productivity costs has been primarily discussed within the framework of cost-utility analysis. This paper investigates the consequences of this assumption for cost-benefit analysis (CBA). It makes three contributions. First, it provides the first analytical account of the overall consequences of ill worker replacement on social welfare and it analyzes the associated compensation effects within a CBA framework. Second, it highlights a double counting problem that arises when ill worker replacement is assumed in the CBA of life-saving health care programs. To the best of our knowledge, no satisfactory solution to this problem has yet been provided in the literature. Third, this paper suggests and discusses two original ways to address this double counting issue. One consists in adjusting value of a statistical life estimations for the well-being provided by future incomes. Another possibility lies in the estimation of marginal rates of substitution between health and wealth so as to directly monetize the value of life over and above consumption. We show that both solutions raise unresolved questions that should be addressed in future research to enable appropriate use of the FCM in CBA.

Type
Articles
Information
Health Economics, Policy and Law , Volume 9 , Issue 2 , April 2014 , pp. 215 - 229
Copyright
Copyright © Cambridge University Press 2014 

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