Economic Burden of Neurological Disorders in an Aging Society, the Example of Japan: A Panel Data Analysis

Abstract

Background: This research explored the burden of two neurological diseases, Alzheimer Disease (AD) and strokes on Japanese economy. While previous studies on the topic focused on accounting costs associated with the diseases, our research explored the loss of gross domestic product (GDP) due to the reduction of the labor force, which is attributed to increased prevalence and informal care of both diseases.

Methods: Using time series panel data from Japanese prefectures between 2001 to 2012, we analyzed our study in two steps. First, we quantify the loss of GDP due to the reduction of labor force using the Cobb-Douglass production function to measure the relationship between the output (products) and labor.  Next, we analyzed the total labor loss (LT) attributed to the increase prevalence and informal care of the two diseases. Finally, we plug the estimated value of LT in Cobb-Douglass-type of production function, in order to obtain the loss in output due to the shortage of labor.

Findings: The difference between two GDPs (GDP with no labor loss and the actual GDP) is maximized in 2001, is 1.4%. However, it is interesting to note that, despite a steady increase of shortage of labor over the years, the gap between actual and predicted GDP is shrinking and in 2012 the gap is 1%. This evolution could be explained by higher values for capital and total factor productivity.  Urban prefectures such as Tokyo or Osaka tended to suffer less from a loss of GDP than rural ones, such as Aomori, Niigata or Hokkaido for instance. In addition, empirical results show that, prefectures relying heavily on tourism such as Kyoto, Nara or, to a lesser extent, Kagawa, appeared to show reduced losses due to the shortage of labor, as a consequence of AD and strokes.

Interpretation: Our study confirmed that economic costs as a result of labor loss are higher than accounting costs. The empirical analysis confirmed that the loss of labor due to AD and strokes has been increasing over the past decade. However, owing to increased investments in Research and Development (R&D) and higher private capital stock, the loss of GDP has been slightly reduced in the period of study. Nevertheless, given the trend of aging population in Japan and many other G20 economies, increasing R&D and private capital stock may not be sustainable in the future.

Funding Statement: This research was supported by JSPS Kakenhi (2019-2020) Grant-in-Aid for Young Scientists No. 19K13742 and Grant in-Aid for Excellent Young Researcher of the Ministry of Education of Japan (MEXT).

Declaration of Interests: Authors report no conflict of interest.

Ethics Approval Statement: Not required.

Keywords: Neurological Disorders; Aging Society; Economic Burden; Japan