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The value of productivity: human-capital versus friction-cost method

Abstract

Many cost-of-illness studies have investigated the impact of rheumatoid arthritis on productivity, invariably concluding that productivity costs are high. Different methods exist to value productivity. The human-capital method takes the patient’s perspective and counts any hour not worked as an hour lost. By contrast, the friction-cost method takes the employer’s perspective, and only counts as lost those hours not worked until another employee takes over the patient’s work. Both methods can produce widely different results. Productivity costs have the potential to compensate for the costs of expensive biological agents, but only in early-onset disease when patients still have jobs and if productivity is given full weight by using the human-capital method. If productivity is given less weight by excluding productivity costs or by using the friction-cost method, then currently, biological agents are probably too expensive.

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