The value of healthy ageing: Estimating the economic value of health using time use data

Economic arguments in favour of investing in health and health care are important for policy making, yet demonstrating the potential economic gains associated with health at older ages can be empirically challenging due to older peoples' limited attachment to the labour market.

We develop a novel method to quantify the economic value of health through time use data. Using data on people aged 65 years-old and older from the United Kingdom Time Use Survey (UKTUS) 2014-15, we apply survey-weighted generalized linear models to predict the time spent in non-market productive activities conditional on characteristics including age and self-perceived health. We weight these estimates of predicted minutes spent in each activity using household satellite accounts to quantify the monetary value of time spent engaging in non-market productive activities according to health status and simulate the monetary impact of health gains at older ages.

Both age and self-perceived health status were associated with minutes spent in many non-market productive activities. Summing the monetized predictions of minutes spent across all types of activities indicates that being in "very good" instead of "very bad" self-perceived health is associated with an additional production of 439£, 629£ and 598£ (in real 2015 GBP) per month for an average individual aged 65 to 74 years-old, 75 to 84 years-old and 85 years-old and older, respectively. Using our simulation model, if 10% of older people in "very bad" health in the United Kingdom were to transition to "very good" health it could lead to an increase of up to 278£ million through the production of non-market activities.

Health at older ages creates considerable economic value which is not observed using standard national accounting measures. Our method to quantify the monetary value of health can be adapted to other settings to make the economic case for investing in healthy ageing.