Abstract
While health naturally has intrinsic value and maintaining health as people age seems to make good economic sense, making the case for investing in health at older ages can be challenging. Much economic growth is historically attributed to the working-age population; however, maintaining good health as people age also enables older people to contribute meaningfully to the economy. Investing in health at older ages, therefore, can be strategic economic policy. We develop a novel method to quantify the economic value of health through time use data. Using data from the United Kingdom Time Use Survey (UKTUS) 2014-15 for individuals aged 65 years-old and older, we apply survey-weighted generalized linear models to predict the time spent in non-market productive activities based on age and self-perceived health. We then quantify the monetary value of time spent engaging in these activities and simulate the monetary impact of health gains at older ages. Both age and self-perceived health status were associated with minutes spent in many non-market productive activities. Being in ‘very good’ instead of ‘very bad’ self-perceived health is associated with an additional production of 439£, 629£, and 598£ per month for an average individual aged 65 to 74 years-old, 75 to 84 years-old, and 85 years-old and older, respectively. Our simulation model indicates that improving the health of 10% of older people in ‘very bad’ health could lead to an economic increase of up to 278£ million through non-market activities. Health at older ages creates considerable economic value which is not captured using standard national accounting measures. Our work highlights the importance of health for functional capacity as people age, allowing them to engage more in non-market activities. Our method to quantify the monetary value of health can be adapted to other settings to make the economic case for investing in healthy ageing.