The Valuation of Productivity Costs Due to Premature Mortality: A Comparison of the Human-Capital and Friction-Cost Methods for Schizophrenia

Abstract

OBJECTIVE: To compare productivity-cost estimates for schizophrenia-related premature mortality in Canada in 1996 using the human-capital (HC) approach and friction-cost (FC) method. METHODS: The number of deaths directly attributed to schizophrenia was combined with the estimated number of deaths attributable to schizophrenia from suicide. These premature deaths were valued using 2 methods: 1) the traditional HC approach, based on "potential" lost output to normal age of retirement, and 2) the FC method, based on finding a replacement worker. RESULTS: In 1996, there were 342 male and female preretirement deaths attributed to schizophrenia, directly or indirectly by suicide, in Canada. Most deaths were in males (78%) and by suicide (97%). The productivity cost of these deaths was estimated to be $105 million using the HC approach but only $1.53 million using the FC method. CONCLUSIONS: Productivity-cost estimates from the HC approach are substantially higher than those obtained from the FC method (69 times higher). In circumstances of unemployment, the HC approach is an overestimate of future productivity losses for premature mortality.

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