THE LONG-TERM ECONOMIC VALUE OF A NEW-BORN CHILD COMPARISON OF THE HUMAN CAPITAL AND THE LIFETIME INVESTMENT APPROACHES
Author(s)
Gáspár K1, Kaló Z2, Ágh T1, Vámossy I3, Lehmann M4, Nagy B1
1Syreon Research Institute, Budapest, Hungary, 2Eotvos Lorand University (ELTE), Budapest, Hungary, 3Gedeon Richter Plc, Budapest, Hungary, 4PregLem SA, Geneva, Switzerland
OBJECTIVES: The aim of the study is to assess the long-term economic value of one additional child born in Hungary, Italy, Spain, Sweden and the United Kingdom. METHODS: Two different methodologies are applied. The Human Capital Approach representing the perspective of the society is used to estimate the potential loss in production for every unborn child. It is calculated by summing up the discounted value of all expected future gross earnings of the individual, including an imputed value for household production. The Lifetime Investment Approach representing the point of view of the government is used to calculate the impact of an additional child on the fiscal balance. Expected revenues from taxes and social contributions and expected public expenditures (e.g. education, health, pension, etc.) for the lifetime of average person are calculated. The net balance is discounted to obtain the present value. Input data is obtained from the statistical databases of the OECD and EUROSTAT and from own calculations. Results are presented as a percentage of GDP per capita for 2012. RESULTS: Preliminary results indicate that there is great heterogeneity between countries in the values of one additional child born. The present value of future earnings according to the Human Capital Approach indicates that a child will produce 11 to 21 times the 2012 GDP per capita during his lifetime. According to the Lifetime Investment Approach, an average child will contribute 3.4 and 6.0 times the GDP per capita of government revenues by the end of his lifetime. CONCLUSIONS: The two methods used present gains (or losses) of an additional child from the perspective of the society as well as from the point of view of the sustainability of public finances. Results vary by country. Therefore, it is essential that such calculations are performed on a country-by-country bases.
Conference/Value in Health Info
2014-05, ISPOR 2014, Palais des Congres de Montreal
Value in Health, Vol. 17, No. 3 (May 2014)
Code
PRM23
Topic
Economic Evaluation
Topic Subcategory
Cost/Cost of Illness/Resource Use Studies
Disease
Multiple Diseases