Environmental Project, 929 – Valuation of Chemical related Health Impacts - Estimation of direct and indirect costs for asthma bronchiale, headache, contact allergy, lung cancer and skin cancer

Valuation of Chemical related Health Impacts

10 Unit costs - summary of results

This chapter summarises and discusses the estimates that have been developed through chapter 3-7. Furthermore, the aim is to set up low and high unit cost estimates for each disease based on the discovered uncertainties.

10.1 Summary of results

Table 10-1below summarises the results from the estimations in chapter 3 to 7. The relative distribution of the costs is seen in

Table 10-1: Summary of unit cost estimates, DKK, 2002-prices

		Discount rate: 3%	Discount rate: 6%
Headache (cost per episode)	Direct costs	1
	Welfare loss	179
	Production loss	184
	Total unit cost	364
Contact allergy (cost per patient)	Direct costs	40,671	28,341
	Welfare loss	230,864	156,818
	Production loss	19,753	13,418
	Total unit cost	291,288	198,577
Asthma (cost per attack)	Direct costs	417
	Welfare loss	1,186
	Production loss	391
	Total unit cost	1,993
Lung cancer (cost per patient)	Direct costs	143,685	142,090
	Welfare loss	9.286.110	9.147.796
	Production loss	253,616	235,802
	Total unit cost	9.683.411	9.525.689
Skin cancer (cost per patient)	Direct costs	12,171
	Welfare loss	230,629
	Production loss	6,625
	Total unit cost	249,424

In general it is seen that the indirect costs count for the major part of all cost estimates, ranging from 79% to 99.7% of the total unit costs. Especially, the individual welfare loss becomes of major importance counting for 40% to 96% of the cost estimate

Figure 10-1: Relative distribution of the cost elements (3% discount rate)

Figure 10-1: Relative distribution of the cost elements (3% discount rate)

10.2 Uncertainties - Low and high unit cost estimates

Low and high unit cost estimates may be useful in connection with economic assessments, and is provided here, by a heuretic approach. This basically means, that uncertainties are analysed by a combination of information of uncertainties of various parameters based on various sources combined with the consultant's judgement. Ideally, high and low estimates should be developed through complex mathematical simulations by combining uncertainties of all uncertain parameters. This, however, demands extensive data and is rather complex, and will not be possible within the present project.

The low and high unit cost estimates are to reflect the 5% and the 95% percentiles respectively. Thus, the low estimate illustrates the level at which the "true" unit cost value with 5% probability will be equal to or lower than. Likewise, the high cost estimate illustrates the level at which the "true" value with 5% probability will be equal to or higher than. This principle is illustrated in Figure 10-2 below.

Figure 10-2: Illustration of the principle behind low and high estimates

Figure 10-2: Illustration of the principle behind low and high estimates

The present approach is divided in two steps. First, the critical elements of the unit cost estimates are identified from two criteria: Their relative importance and their degree of uncertainty. Secondly, high and low values of the identified critical elements are set and the effect on the unit cost estimates is analysed.

10.2.1 Identification of critical elements

The assessment of relative importance and degree of uncertainty is done for each of the three main elements: direct costs, welfare loss and production loss. Each element is assigned a weight (on a ordinal scale) from 0 (unimportant/no uncertainty) to 3 (very important/large uncertainty). The assessment results are relative to each other among cost elements and diseases.

Below, the assessment of importance and uncertainty is presented for each disease by a table supplemented by bullets explaining the assessment.

Headache:

Direct costs: of no importance, but rather uncertain
Welfare loss: Counts for 40% of the unit cost value and thus of some importance. Some degree of uncertainty, due to a WTP survey from Norway. However, definition of the disease in the present study is identical with definition of the WTP survey.
Production loss: Counts for 60% of the unit cost value, meaning great importance. The extent of absence from work is rather uncertain, resulting in uncertainty of 2.

Table 10-2: headache

Cost element	Relative importance	degree of uncertainty
Direct costs	0	2
Welfare loss	2	2
Production loss	3	2

Contact allergy

Direct cost: Is of little importance and subject to relatively little uncertainty
Welfare loss: Counts for 79% of the unit cost value and thus of great importance. Uncertainty is high, due to no precise WTP estimate available (WTP of a "symptom day" used) as well as uncertainty about the number of symptom days per year.
Production loss: Of little importance and some uncertainty (number of days of absence may be underestimated).

Table 10-3: Contact allergy

Cost element	Relative importance	degree of uncertainty
Direct costs	1	1
Welfare loss	3	3
Production loss	1	2

Asthma

Direct cost: Of little importance and subject to relatively little uncertainty
Welfare loss: Counts for 59% of the unit cost value and thus of great importance. Rather good WTP estimate but taken from a Norwegian survey, and benefit transfer is always subject to some uncertainty
Production loss: Of little importance and little uncertainty due to high quality data on degree of absence

Table 10-4: Asthma

Cost element	Relative importance	degree of uncertainty
Direct costs	1	1
Welfare loss	3	2
Production loss	1	1

Lung cancer

Direct cost: Of little importance and subject to relatively little uncertainty
Welfare loss: Counts for 96% of the unit cost value and is thus of great importance. Very large uncertainty due to benefit transfer from a Sicilian study, where the context and approach are uncertain, combined with the great uncertainty of the value of a statistical life.
Production loss: Is of little importance but subject to a high degree of uncertainty, since the extent of absence during the illness is unknown and thus based on guesstimates.

Table 10-5: Lung cancer

Cost element	Relative importance	degree of uncertainty
Direct costs	0	1
Welfare loss	3	3
Production loss	0	3

Skin cancer

Direct cost: Of little importance and subject to relatively little uncertainty
Welfare loss: Counts for 92% of the unit cost value and is thus of great importance. Very uncertain as described in chapter 9.4.
Production loss: Of little importance but a certain degree of uncertainty, since no high quality data on the degree of absence has been found.

Table 10-6: Skin cancer

Cost element	Relative importance	degree of uncertainty
Direct costs	1	1
Welfare loss	3	3
Production loss	0	2

10.2.2 Assessment of low and high values

The low and high values are developed by setting up high and low values of each of the most important and uncertain parameters, relatively speaking and re-estimate the unit cost under combinations of these parameter values.

Headache