BOOKS OF RtfiDIfGS - PAHO/WHO

- 358
Application of Cost-Benefit Analysis to Health Sevmic /
1. Our ordinary concern is with loss in earnings, not income. The latter includue
income from property.
2. Consumption by survivors is no longer subtracted from gross earnings in order to
artive at net earnings. Viewed prospectively, everybody is a member of society, including
the patient (54).
3. The value of housewives' services is recognized, despite the fact that such services
are not traded in the market and are omitted from the GNP. Weisbrod (13, pp. 114-119)
developed and applied a complex method for measuring the cost of a substitute
housekeeper, but subsequent writers have followed Kuznets (55) in employing a simpler
approach, putting the value of the services of a housewife at the level of earnings of a
full-time domestic servant. To employ a single number is the more practical procedure by
far. The magnitude of that number is a separate question, however. It is increasingly
evident that the value given by the earnings of a domestic servant is not adequate (56).
Thus, the accepted value of the housewife's contribution would increase substantially if
day care centers for working women were expanded at public cost.
An alternative approach is to value the housewife's contribution at the opportunity
cost of her staying out of the labor force (45). Implementation of this approach is
impeded by two considerations (57). First, the method is complicated, since values would
vary with the individual housewife's educational attainments, type of occupation, amount
of job experience, full- or part-time employment status, etc. Second, nonpecuniary
factors, which certainly influence the labor force participation rates of women, are
difficult to measure and may behave erratically. When total family income permits, the
pecuniary opportunity cost of the wife's staying home has been known to be as low as
zero or even negative.
4. The employment rate has been typically taken at 96 per cent, or an overall level of
4 per cent unemployment at the level of "full" employment (44). In the 1970s the
magnitude of this rate is at issue. Whatever the magnitude, Mushkin's argument is
accepted that the health services system should not be charged with failures by the
economy to provide jobs to all who seek them (41, 58).
What is often not taken into account is the tendency for persons rehabilitated after
serious illness or injury to find fewer job opportunities than persons who have remained
healthy and on the job. In my study of syphilis (45), 1 recognized the loss of earnings due
to the "stigma" attached to this and similar diseases. When prevention is feasible, it seems
appropriate to assign to it an extra weight or bonus for this reason.
5. Calculations of indirect benefits rest on the implicit assumption that the life
expectancies of cohorts of potential survivors are known. Usually standard life tables are
employed, separately for men and women. For diseases of low frequency it seems
reasonable to disregard any effect on the total death rate occasioned by the deletion of a
particular cause of death. For major diseases the problem is important, although simple
deletion may be incorrect. As Weisbrod (13, pp. 34-35) recognized more than a decade
ago, survivors who have avoided a particular cause of death may have a higher or lower
susceptibility to other, competing causes of death. I compared the effects of simply
deieting heart disease as a cause of death on life expectancy and on work-life expectancy.
The former was large-1 1 to 12 years-and the latter was small-less than a year (46). For
a disease with heavier impact at the younger ages, the effect on work-life expectancy
would be relatively larger, and correspondingly greater attention would have to be paid to
the effect of competing causes of death.
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