Heart Disease and The Economic Contributions of Elderly Men and Women: Evidence from Australia

• Published date: 01 December 2022
• Author: Marie Ishida,Teralynn Ludwick,Ajay Mahal
• Date: 01 December 2022
• DOI: http://doi.org/10.1111/1467-8462.12489

The Australian Economic Review, vol. 55, no. 4, pp. 461–476 DOI: 10.1111/1467-8462.12489

Heart Disease and The Economic Contributions of Elderly Men

and Women: Evidence from Australia

Marie Ishida, Teralynn Ludwick and Ajay Mahal*

Abstract

Macroeconomic forecasts and program eva-

luations of health service interventions are

pessimistic about ageing populations, given

their low work participation and high demand

for social services. We estimate the impact of

heart disease on paid work and the value of

unpaid non‐market activities of the Australian

elderly, using Household, Income and Labour

Dynamics in Australia (HILDA) data, f‌inding

signif‌icant losses in the value of their

contributions to adult care and voluntary

work. Impacts on non‐market contributions of

older women were more signif‌icant than for

older men. A broader perspective on the value

of the contributions made by the elderly is

needed to enhance eff‌iciency and (gender)

equality.

1. Introduction

Globally, policymakers are becoming concerned

about the macroeconomic prospects of popula-

tion ageing, including the f‌iscal outlook of

countries with large, ageing populations

(Bloom, Canning and Fink 2010; Government

of India 2020; Kim and Dougherty 2020). A key

driver of economic pessimism associated with

thegrowingshareoftheelderlyinnational

populations is the view that they contribute

relatively little to the economy, given their low

participation rates in paid work, while generating

demands on scarce resources. In the Australian

context, economic concerns about Australia's

ageing population are ref‌lectedinmultiple

government policy reports (e.g., Productivity

Commission 2013; Commonwealth of Australia

2015, 2019). The inf‌luential Productivity

Commission (2013) report estimated that rising

expenditures on pensions, healthcare and old age

care would require funding amounting to an

additional 5.7 per cent of Australia's gross

domestic product (GDP) over the next 50 years,

asignif‌icant increase over existing shares of

national spending.

Focusing disproportionately on the low work

participation of the elderly undervalues, how-

ever, their economic and social contribution

through other channels, including volunteer

work, provision of childcare and taking care of

other adults, efforts that are typically excluded

from off‌icial GDP statistics. Cylus et al. (2019)

argue that the economic and social contributions

of the elderly can considerably mitigate the

macroeconomic and f‌iscal challenges associated

* Ishida and Mahal: Nossal Institute for Global Health,

University of Melbourne, Melbourne, Victoria 3000,

Australia; Ludwick: Centre for Epidemiology and

Biostatistics, University of Melbourne, Melbourne,

Victoria 3000, Australia. Corresponding author: Mahal,

email <ajay.mahal@unimelb.edu.au>.

An early version of the research reported in this paper was

supported by Edwards Life Sciences Inc.

© 2022 The University of Melbourne, Melbourne Institute: Applied Economic & Social Research, Faculty of Business

and Economics.

Published by John Wiley & Sons Australia, Ltd

with ageing. One recent study valued this

unpaid work at between 10 and 40 per cent of

GDP in Organization for Economic Cooperation

and Development (OECD) countries (Alonso

et al. 2019). Estimates based on data from the

Australian Bureau of Statistics' Survey of

Disability, Ageing and Carers (SDAC) show

that almost one‐quarter of all providers of

informal adult care in Australia are individuals

65 years and over (Australian Institute of Health

and Welfare AIHW 2018). Further, one‐fourth

of Australian grandparents reported providing

childcare for children below school age (Baxter

and Warren 2015; Australian Institute of Health

and Welfare AIHW 2018). Because a signif‌icant

share of these unremunerated activities is

undertaken by women family members, whose

work participation rates are typically lower than

men, the emphasis on workplace productivity in

policy setting discussions is likely to yield

programs that discriminate against older women

(Organization for Economic Cooperation and

Development OECD (2014)).

This paper takes a step towards a fuller

accounting of the economic value of contribu-

tions of the elderly in a health policy context

by estimating the implications of heart disease

for earnings from work and the value of

unpaid non‐market activities of the elderly in

Australia, using data from two waves of a

longitudinal household survey from Australia

(the Household, Income and Labour

Dynamics in Australia [HILDA] survey)

(Wilkins et al. 2019). The prevalence of heart

disease rises markedly with age and, in high‐

income countries such as Australia and the

United States, accounts for the largest propor-

tion (almost one‐quarter) of the burden of

disease in those over 65 years and incurs

higher direct healthcare costs than for any

other chronic disease group (Australian

Institute of Health and Welfare [AIHW]

2018; Schof‌ield et al. 2019). For those aged

below 65, health shocks are known to reduce

an individual's labour force participation and

income, with men also less likely to work

following a health shock experienced by their

female spouse (Garcia‐Gomez et al. 2013;

Schof‌ield et al. 2019). Correspondingly,

studies for the United States have

demonstrated that reductions in cardiovascular

disease are associated with increased labour

supply and educational attainment (Hansen

and Strulik 2017; Kotschy 2021). While many

countries are raising retirement ages and

instituting policies to support mature workers

to remain in the workforce longer, little is

known about the impact of health shocks on

the labour force participation of those aged

over 65, employment earnings and productive

non‐market activities (PNMA), including in

Australia. One of the f‌irst studies to examine

this older cohort, in the context of the United

States and Europe, f‌inds signif‌icant effects of

acute health shocks on both market and non‐

market productive activity but does not

examine effects according to types of unpaid

activities (Bloom et al. 2020). Unlike this

earlier work, which focuses on the implica-

tions of ill health for the aggregated value of

unpaid work from multiple activities (child-

care, adult care, voluntary work), we examine

the disaggregated implications of heart dis-

ease for these activities in the specif‌ic context

of Australia. In doing so, our analysis sheds

light on how productive contributions of

elderly women and men change in response

to illness, in different activities, in a manner

that has not been addressed in previous work.

When policymakers underestimate the eco-

nomic contributions of the elderly to produc-

tive market and non‐market activities, they are

likely to undervalue and under‐invest in

interventions, including health‐improving

ones, which could help increase their labour

market and non‐market contributions. Such

investments include preventive interventions

and primary care services that can lower the

risk of developing non‐communicable dis-

eases (NCDs), rehabilitation efforts to im-

prove functioning among elderly following

acute illness, and support for people with

chronic conditions such as diabetes and

chronic obstructive respiratory disease.

Moreover, resource allocation decisions that

neglect the value of unpaid but productive

services provided to society by the elderly will

yield socially ineff‌icient outcomes. For in-

stance, in economic evaluations of health

sector interventions (including public and

462 The Australian Economic Review December 2022

© 2022 The University of Melbourne, Melbourne Institute: Applied Economic & Social Research, Faculty of Business

and Economics.