Economic Effects of Chronic Diseases on Iranian Household Income and Expenditure

Noncommunicable diseases (NCDs) also known as Chronic diseases are regarded as one of the main causes of mortality and exorbitant costs of household in Iran and the world. Few research studies have been conducted on the economic effects of these diseases on individuals and households in Iran. The main objective of this paper is to show the effects of these diseases on health expenditure, non-health consumption, labor income, as well as household transferred income in rural and urban households, which provide some coverage for high expenditures of chronic diseases. As the household income and expenditure data used in this study are censored and discontinuous the two-part Heckman and Tobit model (Heckit) was used for estimation. The obtained results show that the chronic diseases in urban households have a significant relationship with non-health consumption, and they directly affect the household welfare level and do not have any significant effect on other sectors. The results of rural data show that the expenditures of chronic diseases affects the level of health expenditure, non-health consumption, and labor income. Additionally, chronic diseases have a significant effect on transferred income neither in urban households nor in rural ones. The obtained results show that rural households are more affected by the chronic diseases expenditures than urban households and are more vulnerable to it. On the other hand, household income is a determinant variable in health expenditure both in urban and rural households. The results of this study have wide applicability for policymakers in financing programs for treating these diseases, as well as preventing them.