Economic Measures

Estimating the Societal Costs Due to the Influence of Products and Services on Health Behaviors

Our work on the Building H Index provides a framework for understanding how commercial products and services can influence the health of their users by affecting key health behaviors such as diet, sleep and physical activity. These influences can be considered economic externalities – costs that are not paid by the buyer or the seller but rather borne by society as a whole. (Most US healthcare costs are paid by employers or state and federal government programs.) Inspired by work on social impact accounting developed at Harvard Business School, we explored how to estimate the societal costs – or benefits – that result from these product influences on health at the level of an individual company.

Working with our collaborator, Dr. Sara Singer at Stanford University, we developed a methodology for estimating these societal costs and have prototyped the methodology using three very different companies – Burger King, Netflix and Niantic Labs, the original developer of Pokémon GO. A paper describing the methodology and reporting on the findings, along with all of the calculations, has been published in the American Journal of Health Promotion. The methodology is still relatively nascent, but we believe it has promise and could easily be adapted and improved on by others. The results were also sobering – with societal costs and benefits ranging from hundreds of millions of dollars per year to tens of billions. While these numbers are estimates, with significant caveats, their scale is significant.

Our methodology lends itself to wide application and ongoing refinement and we encourage other researchers to try it out, apply it to different types of companies and build on it. It relies on assembling scientific literature and, as such, it can be improved and updated with new research. In addition, it’s modular and several of the modules could be refined with more sophisticated techniques. On this site we provide a general overview of the methodology and other resources, such as the underlying scientific literature we have used thus far. If you’re a researcher interested in working with this methodology, please reach out to us at measures@buildingh.org.

Resources

METHODOLOGY OVERVIEW

A step-by-step guide to applying the methodology to companies whose products and services influence the health behaviors of their customers.

Evidence and Data

The methodology relies on evidence that links products to behavior, behavior to disease risk and data on disease prevalence and treatment cost. This page includes bibliographies of relevant studies and other data sources.