Abstract
We develop and calibrate a dynamic production function model to assess how noncommunicable diseases (NCDs) will affect U.S. productive capacity in 2015-2050. In this framework, aggregate output is produced according to a human capital-augmented production function that accounts for the effects of projected disease prevalence. NCDs influence the economy through the following pathways: 1) when working-age individuals die of a disease, aggregate output undergoes a direct loss because physical capital can only partially substitute for the loss of human capital in the production process. 2) If working-age individuals suffer from a disease but do not die from it, then, depending on the condition's severity, they tend to be less productive, might work less, or might retire earlier. 3) Current NCD interventions such as medical treatments and prevention require substantial resources. Part of these resources could otherwise be used for productive investments in infrastructure, education, or research and development. This implies a loss of savings across the population and hampers economy-wide physical capital accumulation. Our results indicate a total loss of USD94.9 trillion (in constant 2010 USD) due to all NCDs. Mental health conditions and cardiovascular diseases impose the highest burdens, followed by cancer, diabetes, and chronic respiratory diseases. In per capita terms, the economic burden of all NCDs in 2015-2050 is USD265,000. The total NCD burden roughly corresponds to an annual tax rate of 10.8% on aggregate income.