A new approach for estimating the indirect costs of disease, which explicitly considers economic circumstances that limit production losses due to disease, is presented (the friction cost method). For the Netherlands the short-term friction costs in 1990 amount to 1.5–2.5% of net national income (NNI), depending on the extent to which short-term absence from work induces production loss and costs. The medium-term macro-economic consequences of absence from work and disability reduce NNI by an additional 0.8%. These estimates are considerably lower than estimates based on the traditional human capital approach, but they better reflect the economic impact of illness.

Absence from work, Cost of illness, Friction costs, Indirect costs
Allocative Efficiency; Cost Benefit Analysis (jel D61), Government Expenditures and Health (jel H51), Health Production: Nutrition, Mortality, Morbidity, Substance Abuse and Addiction, Disability, and Economic Behavior (jel I12), Mobility, Unemployment, and Vacancies: General (jel J60)
dx.doi.org/10.1016/0167-6296(94)00044-5, hdl.handle.net/1765/69395
Journal of Health Economics
Erasmus School of Health Policy & Management (ESHPM)

Koopmanschap, M.A. (1995). The friction cost method for measuring indirect costs of disease. Journal of Health Economics, 14(2), 171–189. doi:10.1016/0167-6296(94)00044-5