Dissention exists among health economists regarding the measurement and inclusion of productivity costs in a cost-utility analysis. Some health economists believe that productivity costs are captured by quality-adjusted life years (QALYs) in the denominator of the cost-utility ratio. Others argue that productivity costs should be measured monetarily via the friction cost method or the human capital method, and included in the numerator of the ratio. OBJECTIVES: (1) To investigate the extent to which changes in productivity costs are explained by changes in QALYs, (2) To examine the difference between the human capital method and the friction cost method. METHODS: An observational panel study with two survey waves was used to collect data. Surveys were administered through face-to-face interviews to a convenience sample of 102 informal caregivers of the elderly. RESULTS: Changes in QALYs did not explain absence from paid labor, reduced productivity during paid labor, and lost leisure productivity costs. However, changes in QALYs did account for ten percent of the variance in changes in lost unpaid labor (F = 8.67, P <0.01). Friction cost estimates were significantly less than human capital estimates in both the first and second waves of the study (t = 6.96, P <0.01, t = 6.47, P <0.01). CONCLUSIONS: Most productivity cost components should be valued monetarily, and included in the numerator of a cost-utility ratio. If the friction cost method is used, rather than the human capital method, smaller estimates of productivity costs will be obtained.