Indirect costs
Contents
4.1 Productivity losses
4.2 Informal care costs
4.3 Deadweight welfare loss
4.4 Summary of indirect costs
Summary
The indirect costs of vision impairment and blindness include the economic impacts of these conditions on wider society outside the health care system. In 2010, indirect costs included:
- productivity losses of €56.7 million including lost earnings from lower employment and premature death;
- informal care costs of €108.3 million;
- deadweight welfare losses of €104.4 million from government-funded health care costs, welfare payments to the blind and lost taxation revenue.
Total indirect financial costs of vision impairment and blindness summed to €269.3 million in 2010. These are projected to rise to €292.3 million by 2015 and €312.2 million by 2020.
This chapter explores the indirect financial costs of VI and blindness in the ROI. Unlike direct costs, these do not reflect the health care costs of treating VI and blindness, but rather the economic losses that result from the indirect impacts of VI and blindness on society.
In this report, the following indirect costs are estimated:
- productivity losses from reduced labour market participation through lower employment and premature mortality associated with low vision and blindness;
- costs to informal carers from providing care to someone with low vision or blindness; and
- deadweight welfare loss (DWL) associated with raising additional tax revenue to publicly fund health care services and direct payments to people with low vision and blindness.
It is important to distinguish between real costs and transfer costs. A real cost is incurred when economic resources (such as land, labour and capital) are used in the production process of goods and services. When resources are put to a certain productive use, this reduces the opportunity for production in other areas of the economy. This is known as an opportunity cost, and includes productivity and informal care costs.
Transfer payments are payments from one economic agent to another, without a good or service being provided in return and include taxes, subsidies and pensions. These are not a net cost to society as they represent a shift in consumption power from one group of individuals to another. Transfer payments in the context of this study include:
- welfare payments provided to those who are vision impaired or blind;
- the taxation paid by society to the government to fund health care for those who are vision impaired or blind; and
- lost taxation revenue to the government arising from the productivity losses of vision impaired and blind people, and their carers.
Transfer payments have not been presented as an economic cost within this report. Rather, they have been used to estimate associated DWL (lost efficiency) to the economy.