Assessing the macroeconomic and fiscal effects of non-communicable diseases

Non-communicable diseases (NCDs) impose substantial costs on economies by reducing workforce participation and productivity, increasing healthcare expenditure and affecting public finances. Quantifying these costs helps policymakers assess the potential economic and fiscal gains from public health policies that reduce the burden of NCDs. The OECD has developed a framework [O1.1] that combines its OECD SPHeP NCDs microsimulation model, which projects the effects of NCDs on population health, labour market outcomes and healthcare expenditure, with the OECD long-term growth model. Previously, the framework estimated the burden of NCDs on GDP through their effects on workforce participation and productivity. This paper extends the framework by adding healthcare expenditure as a second channel through which NCDs affect GDP, capturing how resources used to treat NCDs could otherwise support investment and capital accumulation in the economy. It also broadens the analysis to assess how NCDs affect public expenditure, including healthcare, pensions and other age-related spending. Applied to four major NCDs across 49 OECD, EU and G20 countries, the enhanced framework provides a more comprehensive assessment of their burden on GDP and public finances.