The macroeconomic impact of chronic disease in the United Kingdom

Abstract

This paper examines the macroeconomic impact of chronic disease in the United Kingdom (UK). We use individual-level data to estimate how diagnoses of six major diseases affect labor market transitions and combine these with a tractable growth model with age-specific productivity and labor force participation to quantify the impact of chronic disease on UK economic growth. Using a novel machine learning approach to classify National Health Service (NHS) cost data, we also provide new estimates of disease-specific treatment costs. Our findings indicate that a 20% reduction in disease incidence would increase annual GDP by 0.99% after five years and 1.51% after ten years. Most of the gains are due to increased participation in the labor force, especially among workers aged 50 to 65 years. Reductions in mental health conditions and musculoskeletal conditions contribute the most to these effects. Our analysis points to three important features of preventative health policies: (1) the potential welfare gains are substantial and manifest themselves in terms of both improved population health and increased output growth, (2) only around 40% of long-term effects appear after five years, and (3) the 50–65 age group experiences the largest labor force participation gains. This last feature is due to two factors: improved health at those ages prevents transitions into health-related inactivity and a larger share of workers reaches this age band as a result of reduced transitions into inactivity at earlier ages. This compounding effect underscores the importance of targeting prevention efforts at earlier ages.