THE FRICTION COST METHOD FOR MEASURING INDIRECT COSTS OF DISEASE

A new approach for estimating the indirect costs of disease, which exp licitly considers economic circumstances that limit production losses due to disease, is presented (the friction cost method). For the Nethe rlands the short-term friction costs in 1990 amount to 1.5-2.5% of net national income (NNI), depending on the extent to which short-term ab sence from work induces production loss and costs. The medium-term mac ro-economic consequences of absence from work and disability reduce NN I by an additional 0.8%. These estimates are considerably lower than e stimates based on the traditional human capital approach, but they bet ter reflect the economic impact of illness.