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Some of the first economic estimates of the costs of foodborne illness were provided by ERS. ERS researchers are currently updating and refining estimates of the costs of foodborne illness, along with details on the assumptions behind the estimates, and will release this information in an updated Foodborne Illness Cost Calculator.
History of ERS Cost Estimates
ERS researchers conducted some of the earliest studies on the economic costs of foodborne illness and have since updated and expanded these analyses using improved estimation methods and better data. Each series of ERS estimates incorporated better information on disease incidence, more detailed data on the health consequences of foodborne illness, and advances in the economic methodologies for valuing health outcomes.
ERS published its first comprehensive cost estimates for 16 foodborne bacterial pathogens in 1989 (see Human Illness Costs of Foodborne Bacteria). These initial estimates reflected the limited information then available about the incidence of foodborne illness, and used cost-of-illness (COI) methodology to tally expenditures on medical care and lost productivity due to nonfatal illness and premature death.
In 1996, ERS updated the cost estimates for six bacterial pathogens (Campylobacter, Clostridium perfringens, Escherichia coli O157:H7, Listeria monocytogenes, Salmonella, and Staphylococcus aureus) in a report, Bacterial Foodborne Disease: Medical Costs and productivity Losses and also estimated the cost of one foodborne parasite (toxoplasma gondii) in an article, "ERS Updates U.S. Foodborne Disease Costs for Seven Pathogens" . ERS continued to use the COI methodology for nonfatal illnesses, but adopted two different health valuation methodologies for premature deaths: the individualized human capital approach and the willingness-to-pay (WTP) approach.
ERS updated the cost estimates for four pathogens (Campylobacter, Salmonella, E. coli O157:H7, and Listeria monocytogenes) again in 2000, and also estimated the cost for E. coli non-O157:H7 (see "Food Safety Efforts Accelerate in the 1990’s" .
The 2000 estimates were based on 1999 estimates of annual foodborne illnesses by the Centers for Disease Control and Prevention (CDC). The COI methodology was used for nonfatal illnesses, and the WTP approach was used for premature deaths.
The Salmonella cost estimate was prepared in collaboration with CDC's FoodNet Foodborne Diseases Active Surveillance Network, and used new sources of data on medical costs and productivity losses including FoodNet surveillance data and a large commercial medical claims database.
The cost estimate for E. coli O157:H7 (now termed STEC O157) was subsequently updated in collaboration with FoodNet in 2005, using FoodNet surveillance data and a case-control study of STEC O157 patients.
In 2003, ERS introduced the Foodborne Illness Cost Calculator, an interactive online version of the updated ERS cost estimates for selected foodborne pathogens. The Cost Calculator initially included the Salmonella cost estimate, and later added the STEC O157 estimate. The Cost Calculator provides detailed information about the assumptions underlying each estimate, and allows users to make alternative assumptions and re-estimate the costs. An updated version with additional pathogens of the Cost Calculator is in development.
ERS researchers have used two methodologies developed by economists for converting adverse health outcomes to a common unit of measurement:
- cost of illness, and
- willingness to pay.
These methodologies and three other approaches for evaluating the effects of policy on health and safety--cost-effectiveness analysis, risk-risk analysis, and health-health analysis--are reviewed in Assigning Values to Life: Comparing Methods for Valuing Health Risks.
The cost-of-illness (COI) approach tallies dollars spent on medical expenses and forgone earnings as a result of illnesses, accidents, or premature deaths. COI estimates have often served as a measure of the monetary benefits of government programs that promote health and reduce the number of premature deaths, illnesses, or injuries. In this kind of analysis, the costs that are avoided are considered to be a lower bound of the value of program benefits. ERS researchers have consistently used the COI approach for nonfatal illnesses, and prior to 1996, they also used this approach for premature deaths.
The willingness-to-pay (WTP) approach measures the resources that individuals are willing and able to give up for a reduction in the probability of encountering a hazard that will compromise their health. It assigns dollar values to life and health, and reflects individual preferences for risk reduction. ERS researchers began using the WTP approach in 1996 for premature deaths.
For the 2000 cost estimates, ERS researchers updated the original 1990 estimate of the value of a statistical life for inflation, and then adjusted this value for age at death. Under this approach, the value of a statistical life is treated as if it were an annuity paid over the average U.S. lifespan at an interest rate of 3 percent. For example, in the updated STEC O157 cost estimate, the estimated value of a statistical life in 2001 dollars varies from $9.0 million at birth to $1.8 million at age 85.
ERS has maintained an online Foodborne Illness Cost Calculator since 2003; however, this tool is currently unavailable while ERS revises its estimates of the cost of foodborne illness.
The modified ERS approach has been described in several publications: