The Economic Value of Eliminating Diseases

CentER Discussion Paper Nr. 2022-029

62 Pages Posted: 12 Dec 2022 Last revised: 22 Jan 2024

See all articles by Julio A. Crego

Julio A. Crego

Tilburg University

Daniel Karpati

Erasmus University Rotterdam (EUR) - Department of Business Economics

Jens Soerlie Kvaerner

Tilburg University

Luc Renneboog

Tilburg University - Department of Finance; European Corporate Governance Institute (ECGI); Tilburg Law and Economics Center (TILEC)

Date Written: November 21, 2022

Abstract

We develop a framework to quantify the welfare gains of reducing health risks. The framework integrates causal effect estimates of health shocks on medical expenses, mortality, disability, labor market participation, earnings, and the need for nursing home care into a life cycle model. Economic benefits reflect both individuals' willingness-to-pay to reduce a particular health risk and net effects on government finances. We apply our framework to Dutch administrative data on medical diagnoses of 6.9 million people and 334 distinct medical diagnoses. Our estimates show that curing cancer or cardio-vascular diseases would result in economic benefits equivalent to 9.5% and 9.1% of the GDP. The corresponding estimates for preventive measures such as eradicating smoking or preventing overweight and obesity are 7.7% and 5.6%.

Keywords: health shocks, life cycle, health economics, public health expenditure.

JEL Classification: D15, D60, G50, H51, I10

Suggested Citation

Crego, Julio and Karpati, Daniel and Soerlie Kvaerner, Jens and Renneboog, Luc, The Economic Value of Eliminating Diseases (November 21, 2022). CentER Discussion Paper Nr. 2022-029, Available at SSRN: https://ssrn.com/abstract=4282600 or http://dx.doi.org/10.2139/ssrn.4282600

Julio Crego (Contact Author)

Tilburg University ( email )

P.O. Box 90153
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

Daniel Karpati

Erasmus University Rotterdam (EUR) - Department of Business Economics ( email )

Netherlands

Jens Soerlie Kvaerner

Tilburg University ( email )

Warandelaan 2
Tilburg, -- 4818HK
Norway
40242704 (Phone)
0364 (Fax)

HOME PAGE: http://www.jenskvaerner.com/

Luc Renneboog

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Warandelaan 2
5000 LE Tilburg
Netherlands
+13 31 466 8210 (Phone)
+13 31 466 2875 (Fax)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Tilburg Law and Economics Center (TILEC) ( email )

Warandelaan 2
Tilburg, 5000 LE
Netherlands

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