Appendices: The Impact of Alzheimer’s

Disease on the Chinese economy

Appendix 1. Alzheimer’s Disease model parameterization
A multistate probabilistic simulation model of Alzheimer’s Disease progression1–3 was used. A full
description of the model and its web-based application is available elsewhere1-2. The Chinese AD
model application was based on age and gender-specific projections of Chinese mortality rates4, age-
specific exponentially growing projections of AD incidence rates from age 60,1 and Chinese
population projections5 to forecast the number of Chinese individuals who contract AD. The
parameter assumptions are outlined in table A1.

Table A1. Additive-mortality multistate AD model

parameterization
Transition probability (p.a.)
- stage 12 11.0%
Additive AD mortality rates (p.a.)
- stage 1 0
- stage 2 0.11
Disability weights
- stage 1 0.45
- stage 2 0.94
Source: Transition probability from Neumann et al (2001)7; Additive AD mortality rates
from Brookmeyer et al (2007)1; Disability weights from Colantuoni et al (2010)3

The model simulates two stages of AD. Individuals have an annual probability of AD onset and AD
begins in stage 1 which corresponds to mild or moderate disease as defined by the Clinical Dementia
Rating (CDR) Alzheimer’s scale6. Individuals in stage 1 progress to stage 2, which corresponds to
severe disease rating on the CDR scale, based on an annual transition probability of 11%.1 The
annual transition probability from stage 1 to stage 2 mirrors the observed transition from Moderate
AD to Nursing Care7 and is consistent with the average six year transition time from detection to
nursing home requirement.8 Baseline simulations follow previous applications3 and assume no
excess mortality for stage 1 patients and an annual 11% excess mortality rate for stage 2 patients.
AD disability weights4,9 were used to estimate Years Lived with Disability (YLD) effects, and, with the
addition of Years of Life Lost (YLL), to calculate Disability-adjusted Life Years (DALYs). Incidence is
assumed to grow exponentially for all ages greater than 60 in the baseline simulations.

Appendix 2: macroeconomic CGE model and SAM data set

The model used for the economic simulations is an economy-wide dynamically-recursive
Computable General Equilibrium (CGE) model. The model was developed based on the ‘IFPRI
Standard Model’ which is a well-known and widely applied static model framework. This model
framework has previously been used as the basis for health analyses10–12, and full documentation is
available elsewhere13. The standard model is a static multi-sector simulation model with multiple
production sectors and goods markets for individual sectors such as agriculture, manufacturing and
services, including health. There are four main forms of economic ‘agents’ in the model: firms,
consumers, government, and foreign agents. Firms seek to combine resource inputs to maximize
profits, while consumers aim to allocate their income between consumption and savings in order to
maximize their welfare. Production technologies are assumed to consist of nested Leontief functions
(intermediate inputs) and Constant Elasticity of Substitution (CES) functions (primary factor inputs)
with a CES function top-nest, while consumer welfare is based on a Stone-Geary utility function.
Standard elasticity values were used for the top-level production specification (0.8) and the bottom-
level factor input demand specification (0.6), while the utility-function was calibrated with a Frisch
parameter value (-2.0) to reflect that China remains a developing country. The government levy
taxes, distributes benefits, and purchases goods directly, while foreign agents interact with domestic
agents through trade in goods and services (firms), unrequited transfers and foreign lending and
borrowing (households and government). Imperfect substitution is assumed in goods and services
trade through an Armington (CES) specification on the import side and a Constant Elasticity of
Transformation (CET) specification on the export side. Standard trade elasticity values were applied
on the import side (1.2) and on the export side (1.5).

A baseline CGE model is calibrated on the basis of data from a given year, and therefore replicates
the economy at a specific time point. Specific impacts or policy interventions are then modelled as
external ‘shocks’ to the economy, following which the model adjusts to the shocks and produces a
new equilibrium solution. The Computable General Equilibrium (CGE) model was calibrated using a
2011 Social Accounting Matrix for China which was extracted from the GTAP 9 database.14 The 2011
China SAM from the GTAP-database (which does not properly account for government budget
deficits) was adjusted to mirror the official 2011 Chinese Government budget deficit of 850billion
RMB.15 The 2011 China SAM was furthermore aggregated to form a 10 sector and 10 commodity
SAM, with four production factors: land, unskilled labor, skilled labor and capital.

Following the calibration of the static model, factor stock updating equations were added, including
labor growth and capital accumulation equations, to turn the static model into an enhanced
dynamically-recursive CGE model framework. Counterfactual labor force projections were derived
from China-specific population projections from the US Census Bureau’s International Database5
corrected for China- and age-specific skilled labor force participation rates16 and (due to a lack of
evidence) a uniform unskilled labor force participation rate from the World Bank’s World
Development Indicators database.17 Skilled labor participation rates remain high for the 45-49 age
bracket (79%) but decline linearly until the 60-64 age bracket (14%) and the 65+ age group (3%)16,
while unskilled labor force participation is 70% for all age groups17.

The upper-age limit should mainly be seen as a conservative restriction on unskilled labour force
participation. The empirical age-specific employment rates (by 5 year age category) for skilled
workers from (Du and Yang 2014) indicates that participation rates for skilled workers aged 65+ is
just 3%. Although this rate applies to the entire 65+ age category, we conservatively chose to only
apply this rate to the 65-79 age category. Age-specific participation rates are not available for
Chinese unskilled workers. Instead, we use data from the World Bank’s World Development
Indicators (WDI) database. They report two sets of national labour force participation rates from the
International Labour Organization (ILO) including (1) estimates for the 15+ age group, and (2)
estimates for the 15-65 age group. The latter estimates are relatively high (2011: 77%) while the
former are smaller (2011: 70%). We conservatively chose to apply the lower national participation
rate (70%) to the unskilled labour force segment (which will probably underestimate labour force
participation among unskilled rural workers, given that skilled workers have pensions which allow
them the option of early retirement), and, although this rate applies to the broader 15+ age group,
we conservatively decided to only apply this rate to the 15-79 age category.

While future economic development may increase the proportion of elderly skilled workers over
time (and Du and Yang present evidence that the proportion of elderly skilled workers increased
between 2005 and 2010), the proportion of elderly unskilled (rural) workers may decline. We
therefore undertook a set of sensitivity analyses to illustrate the sensitivity of our results to the
choice of (unskilled) upper working age, including younger cut-off categories of 64, 69, and 74.
Details of the impact of these alternative working age assumptions on the AD economic burden is
described in the main body text and documented in appendix 5. The economic burden turns out to
be somewhat sensitive to the measure of ‘upper working age’.

The CGE model was subsequently fitted to a counterfactual growth path, where (1) growth rates
decline linearly over time, and where (2) Chinese GDP per capita converges to UK-levels in 2050
(assuming UK growth of 2.2% p.a. over 2011-2050). These assumptions mirror standard long-term
growth rates for developed nations and the recent decline in Chinese growth rates over 2011-2014.
An alternative growth path assumption was also implemented as a sensitivity analysis and involved
fitting the CGE model to an alternative ‘growth rate convergence’ counterfactual growth path where
Chinese GDP growth rates decline linearly to 2.2% p.a. in 2050. Details of the effect of this
alternative growth path assumption on economic disease burden is described in the main body text
and documented in appendix 5. The two scenarios turn out to be fairly similar.

Due to the importance of future wage rates for the assessment of AD economic burdens, the
dynamically-recursive CGE model was extended to account for future predicted changes in Chinese
labor market structures. Specifically, the baseline counterfactual growth path was extended to
account for literature-based predictions that excess unskilled labor supplies may continue until
2025.18 Unskilled labor supplies were allowed to vary freely (and real unskilled labor wages were
fixed) until 2025, after which time unskilled labor supplies were determined by population
projections, labor market participation rates and labor market skill shares (and real unskilled labor
wages, which determines the AD economic burden, were allowed to increase due to demand-
pressure from the growing Chinese economy). While the baseline assumption of continued existence
of excess unskilled labor supplies until 2025 is based on credible IMF-research18, unskilled wage
increases in Chinese niche production sectors has spurred a discussion about whether the ‘Lewisian
turning point’ (the point where excess labor supplies no longer exist) has already been reached. An
alternative counterfactual growth path, based on the assumption that the Lewisian turning point has
already been reached, was therefore also implemented as a sensitivity analysis. Details of the effect
of this alternative labor market structure assumption on economic disease burden is described in
the main body text and documented in appendix 5. The two scenarios turn out to be fairly similar.

The implementation of the dynamically-recursive CGE model was based on a structuralist model
closure, where quantity-adjustment ensures equilibrium in unskilled labor markets during 2011-
2025. Apart from unskilled labor, prices clear all other domestic markets for goods and production
factors (with full employment of available factor supplies), and balance of payments equilibrium is
ensured through adjustments to the real exchange rate. General equilibrium, furthermore, requires
that all institutional budget accounts are balanced, including current and capital accounts for all
agents: private households, firms, the government, and foreign agents. Balance on domestic current
accounts is in all cases ensured through adjustments to savings, while balance on the aggregate
domestic savings-investment account is ensured through the specification of a standard savings-
driven investment closure. Additional closure rules are applied to the government’s current account
in order (1) to ensure that the government budget remains a constant fraction of absorption in the
Chinese economy over time (counterfactual simulation), and (2) to ensure that the government
budget is not expanded by the model shocks within a given year (burden scenario simulations). The
former target is achieved by adopting a so-called balanced macro closure where government
consumption is modelled as a fixed share of absorption, while the latter target is achieved by
adopting a so-called revenue-neutral government budget closure where total government revenues
are fixed to the counterfactual growth path by allowing household tax rates to vary endogenously.
Balance on the current account of the balance of payments is ensured through real exchange rate
adjustment.

We distinguish economic and non-economic disease burdens and therefore employ Net Present
Value of GDP (NPV GDP) impact as the main macroeconomic indicator of the economic AD disease
burden. This accounts for the time value of money and so is the most relevant measure if the
impacts are to be used for long-term investment planning. The Chinese government typically applies
discount rates of 8% for short and medium term projects, but discount rates lower than 8% p.a. for
long term projects.19 We use 8.0% p.a. as our conservative baseline discount rate, but undertake
sensitivity analyses of lower discount rates. Details of the effect of reduced discount rates on the AD
economic burden is described in the main body text and documented in appendix 5. Reduced
discount rates lead to significantly higher AD economic burden estimates.

Appendix 3: Quantification of Alzheimer’s health-to-economy

transmission effects
Labor market time use
Labor force shocks mirror work time lost directly from AD patients, and indirectly from caregiving by
formal workers (who could perform alternative work) and by informal caregivers (who are required
to take time off work). In contrast to previous Cost-of-Illness (COI) studies, the only informal
caregiver time, included in the current economic burden assessments, is that which displaces
employed workers usual work time. Labor force effects are valued at current wage rates, and
changes in AD-related labor are allowed to influence both production of goods and services and the
formation of wage rates. In this way, the macroeconomic framework, used here, allows future AD
health burden predictions to affect the AD economic burden through both labor wage and labor
supply channels as well as other spillover effects to the economy (e.g. added savings and capital
accumulation), something which is left out of Cost of Illness (COI)-based assessment studies.

Direct patient-specific losses of labor market participation was derived from AD model estimates of
Disability-Adjusted Life Years (DALYs), while formal and informal caregiving work-years were derived
from year-specific AD prevalence rates. For quantification purposes, a set of parameters were
employed (see table A2, which is identical to Table 1 in the main body text). First, the number of
formal caregiving work-years per patient-year were derived from China-specific costs of formal
caregiving20 with ‘Mild’ (0.125 work-years per AD patient-year) and ’Severe’ (0.185 work-years per
AD patient-year) conservatively attributed to stage 1 and stage 2 patients respectively. Second,
informal caregiving labor market time use was not available by severity of disease, but uniform rates
were derived by combining China-specific estimates of caregiver time taken off work (0.246 work-
years per AD patient-year) and the proportion of AD caregivers with reduced work-time (25.5%)21
implying, that the total informal work-time loss amounts to around 0.063 work-years per AD patient-
year. The per AD patient-year parameters for formal and informal caregiver labor market time use
were, subsequently, applied to year-specific AD prevalence estimates to derive future growth paths
of ‘health shocks’ to effective labor supplies.
 Table A2. Parameter values for quantification of health-to-economy
impacts
Disease Progression
Stage 1 Stage 2
1. formal caregiving
- work-time (work-years per AD patient-year) 0.125 0.185
2. informal caregiving
- total time loss (years per AD patient-year)
- lower bound (PADL) 0.200 0.200
- upper bound (PADL + IADL) 0.463 0.463
- work-time loss (work-years per AD patient-year) 0.246 0.246
- informal caregivers with reduced work-time (%) 25.5% 25.5%
3. non-care
- medical costs (US$ per patient-year) 1,175 1,373
- non-medical costs (US$ per patient-year) 212 64

Source: own calculations based on published estimates20-22. NB: PADL – personal activities of daily
living; IADL – instrumental activities of daily living.

For the purpose of providing comprehensive analyses, indicators of informal caregiver work-time
loss are complemented with indicators of informal caregiver total time loss. These indicators, which
include both economic and non-economic time use by caregivers, are meant to complement the
economic work time use indicators and add to the non-economic AD health indicators of patient-
specific functional loss. The spread in caregivers (non-economic) time use are measured by applying
lower bound time use parameters, based on Personal Activities of Daily Living (PADL), 22 and upper
bound time use parameter, based on both Personal and Instrumental Activities of Daily Living (PADL
and IADL)22 to year-specific AD prevalence estimates to derive future growth paths of lower and
upper bounds for informal caregiver time use. Instrumental Activities of Daily Living includes
additional factors such as preparing food, shopping, laundry. The lower (PADL) and upper (PADL and
IADL) bound per AD patient-year parameters on informal caregiver time use are included in Table
A2.

Health-care Costs
Public health system effects are modelled as either non-care medical or non-care non-medical costs.
Medical and non-medical unit costs in 2011 US$-prices (see table A2, which is identical to table 1 in
the main body text) were derived from China-specific 2006 RMB-cost estimates.20 Average 2006
RMB-costs of non-care expenses per patient were obtained from Wang et al’s20 ‘Mild’ and ’Severe’
categories which were conservatively attributed to stage 1 and stage 2 patients, respectively. Future
medical and non-medical unit costs were, subsequently, derived based on the conservative
assumption of simple price-indexation. Hence, the real cost of these health-related goods and
services are assumed to stay constant over time (nominal costs are assumed to grow with the
general price level). Finally, future unit prices were applied to year-specific AD prevalence estimates
to derive future growth paths of ‘health shocks’ to public health system costs.

Appendix 4: Dynamic analyses of the AD economic burden

The dynamics of the changing Net Present Value of GDP (NPV GDP) economic disease burden
composition are driven by multiple factors. A key factor is the 2025 Lewisian turning point: Health-
related labor force shocks have smaller impacts in the early years, during the period of excess
unskilled labor supply (with fixed real wages), and larger impacts in later years, when the unskilled
labor force is assumed to be fully employed (and real wages are growing). However, the main factors
are the continuing rapid (although decelerating) counterfactual Chinese growth path and the
demographic transition of the Chinese population (with rapidly growing shares of extremely old
citizens in need of care), which means that maximum patient-specific mortality (15%) and morbidity
(21%) shares are reached around 2033, after which point they start to decline.

The cumulative NPV GDP impact per (living) patient case is estimated to be around $45,300 (see
main body text). For comparative purposes, we also note that the annual real GDP per patient
impact (in 2011 US$ prices) varies from US$2,619 in 2011 to US$38,180 in 2050 (not shown).
Previous COI-based studies22 estimated the cost per case of dementia in Asia as US$10,890 (in 2009
US$ prices), suggesting that our macroeconomic estimates are lower in the initial years, but grow
exponentially by 2050. The reason for our low initial estimates is our focus on distinguishing
economic and non-economic impacts (not valuing informal time use unless it affects labor market
participation) and our labor market assumption of excess unskilled labor supply until the ‘Lewisian
turning point’ in 2025, while the reason for the subsequent exponential increase may be attributed
to several factors including the strength of the predicted growth of the Chinese economy, the
cessation of excess unskilled labor supply after 2025 which means that loss of productive labor is
more significant once the pool of excess labor has dried up, and also the burgeoning elderly working
population in later years which implies that more incident cases of AD will involve growing patient-
specific morbidity and mortality effects on the labor force combined with growing care and non-care
costs.

Appendix 5: Sensitivity analyses

Sensitivity Analyses
Sensitivity analyses were performed on macroeconomic model assumptions, AD health model
assumptions, and formal and informal care ratios. Furthermore, all assessments were made with
reference to the impact on our preferred cumulative NPV GDP measure of AD economic burden. Full
explanations of the sensitivity analyses and their results are presented in this appendix.

Summary of Sensitivity Analyses

Among macroeconomic model assumptions, reductions in the upper working age to 74, 69 and 64
(baseline: 79) reduced the AD economic burden by 10-24%, while reductions to 7.0%, 6.0% and 5.0%
in the conservative discount rate (baseline: 8.0% p.a.) increased economic burden estimates by 31-
129%. In contrast, economic burden estimates showed little sensitivity to the literature-based
macroeconomic assumption of excess unskilled labor supply until 2025 and of changing the key
Chinese development growth path assumption to assume convergence to a long-term developed
country growth rate of 2.2% p.a. (instead of convergence to UK income levels) in 2050.

Variation in AD model assumptions followed previous AD model sensitivity analyses:3 Variations in

disease transition times by ±2 years yielded ±2% changes in AD economic burden; Introducing
constant rather than exponential incidence rates beyond age 90 reduced the economic burden by
1.6%; Reducing incidence rates by 50% for all ages led to a proportional 48.7% reduction in
economic burden; Introducing ‘excess stage 1 mortality’ equivalent to half of the stage 2 excess
mortality reduced the economic burden by 7.6% (highlighting the counter-intuitive relationship
between increased AD mortality and reduced economic burden which previously has been observed
in the literature26); And finally, ±25% changes in ‘background mortality’ had little impact on the
economic burden (±0.4%).
Sensitivity analyses of changes in formal-to-informal care ratios were implemented using upward
linear convergence from reduced 2011 national rates (reduced relative to Shanghai rates) towards
Shanghai-specific20 baseline rates in 2050. The economic disease burden estimates from these
sensitivity analyses varied by less than 5% (US$395miliion) from the baseline.

Overall, model results proved to be robust to changes in macroeconomic and AD model assumptions
and also robust to extreme changes in formal-to-informal care ratios. The most important
sensitivities were the potential for (1) increased burden estimates from lower discount rates and (2)
decreased burden estimates from reductions in upper working age. The following sub-sections
present detailed sensitivity analyses of macroeconomic CGE model and AD health model
assumptions.

Detailed sensitivity analyses of macroeconomic CGE model assumptions

Detailed sensitivity analyses of macroeconomic CGE model assumptions including labor market
assumptions (Table A3) and non-labor market assumptions (Table A4) are presented in this section.
Looking at the labor market assumptions, first, the assumption that the ‘Lewisian turning point’ has
already been reached and, hence, that no excess unskilled labor supply is available until 2025 (the
baseline assumption) increases the economic burden estimate to US$8.25trillion (+3.7%). This shows
that the AD economic burden estimate is only mildly sensitive to our baseline assumptions about
future changes to Chinese labor market structures, and it mirrors the fact that real unskilled wages
remain relatively low in the early years, even under alternative labor market structures, but more
importantly that complementary skilled workers are not in excess supply under either baseline or
alternative scenarios.

Our second set of labor market sensitivity analyses varied the (participation-rate adjusted) 15-79
working age assumption by restricting upper working age to 74, 69 and 64. These changes in
assumptions reduced the economic burden estimate to US$7.21trillion (15-74), US$6.62trillion (15-
69), and US$6.26trillion (15-64). These 10-21% reductions suggest that the AD economic burden is
somewhat sensitive to our baseline assumption of 15-79 working age. Moreover, since our
literature-based age-specific labor force participation rates for skilled workers are relatively low for
ages>64 (see appendix 2), the sensitivity to the 64-79 working age assumptions, detected here,
signals the importance of the large future numbers of unskilled caregivers and unskilled AD patients
of ‘near-working age’.
 Table A3. Sensitivity to macroeconomic model assumptions, labor market (NPV; 8.0% p.a.
discount rate)

Restricted working age

'Full unskilled
Baseline employment' 15-64 15-69 15-74
ΔNPV GDP (billion US$) 7,962 8,253 6,262 6,623 7,209
1.25% 1.29% 0.98% 1.04% 1.13%
ΔNPV GDP per capita (US$) 253.4 266.4 178.1 194.1 220.1
0.89% 0.94% 0.63% 0.68% 0.78%
ΔNPV GDP per patient case-year (US$) 45,328 47,025 35,670 37,721 41,049
Source: own calculations

Table A4. Sensitivity to macroeconomic model assumptions, non-labor market (NPV;

variable discount rate)
Growth path
sensitivity analysis Discount rate sensitivity analyses
UK-China growth
rate convergence in (7.0% (6.0% (5.0%
Baseline 2050 p.a.) p.a.) p.a.)
ΔNPV GDP (billion US$) 7,962 8,276 10,406 13,723 18,253
1.25% 1.20% 1.30% 1.35% 1.39%
ΔNPV GDP per capita (US$) 253.4 259.5 293.5 338.6 388.6
0.89% 0.85% 0.93% 0.96% 0.99%
ΔNPV GDP per patient case-year (US$) 45,328 47,113 50,045 55,017 60,182
Source: own calculations. NB: 8% discount rate applied in Baseline and Growth path sensitivity analysis.

Turning to the non-labor market macroeconomic model assumptions (Table A4), reduced discount
rates of 7.0%, 6.0% and 5.0% (baseline: 8.0% p.a) resulted in increased NPV GDP economic burden
estimates of $10.4trillion, $13.7trillion and $18.3trillion, or 31-129% larger than the baseline
estimate. The high sensitivity to our discount rate assumption suggests that the baseline AD
economic burden estimate is likely to be conservative.

The final macroeconomic sensitivity analysis tested our baseline ‘income level convergence’ growth
path assumption (Chinese and UK GDP per capita-levels assumed to converge in 2050). The
alternative ‘growth rate convergence’ growth path assumption (Chinese growth rates assumed to
converge on developed country growth rates, 2.2% p.a., in 2050) increased the economic burden by
nearly 3.9% to US$8.28trillion. The mild sensitivity of the economic burden estimate to our choice of
counterfactual growth path reflects that the alternative ‘growth rate convergence’ scenario leads to
slightly faster growth in income levels and, hence, to slightly faster growth in Chinese wage rates at
which the AD economic burden is assessed.

Detailed sensitivity analyses of AD health model assumptions

Variation in AD health model assumptions followed standard sensitivity analyses for this model-
type:1 (1) Variations in disease transition times by ±2 years, (2) introducing constant rather than
exponential incidence rates beyond age 90, (3) reducing incidence rates by 50% for all ages, (4)
introducing ‘excess stage 1 mortality’ equivalent to half of the stage 2 excess mortality, and (5) ±25%
changes in ‘background mortality’. Results are presented separately for variation in non-mortality
parameters (Table A5) and for mortality parameters (Table A6). Decomposition results are included
to illustrate how health model assumptions affect structural variation in economic burden
composition. As noted above, the health model sensitivity analyses are performed with reference to
the impact on our preferred cumulative NPV GDP measure of AD economic burden.

Table A5. Sensitivity to AD health model assumptions, non-mortality parameters (NPV; 8.0%
p.a. discount rate)
Transition Time Constant incidence Reduced incidence
Baseline 4 years 8 years (age>90) (50% reduction, all ages)
ΔNPV GDP (billion US$) 7,962 7,749 8,137 7,825 4,087
1.25% 1.21% 1.28% 1.23% 0.64%
ΔNPV GDP per capita (US$) 253.4 237.3 266.0 248.5 130.6
0.89% 0.84% 0.94% 0.88% 0.46%
ΔNPV GDP per patient case-year
(US$) 45,328 47,563 44,117 45,381 45,198
Decomposition 1
- Mortality 901 1,010 825 901 453
- Stage 1 3,585 2,548 4,354 3,495 1,865
- Stage 2 3,478 4,193 2,960 3,431 1,769
Decomposition 2
Patient labor force reduction
- Mortality 901 1,010 825 901 453
- Morbidity 1,286 1,277 1,323 1,286 651
Caregiver labor force reduction
- Formal caregiving 1,924 1,877 1,955 1,877 994
- Informal caregiving 798 741 839 778 413
Other costs
- Medical costs 2,731 2,585 2,831 2,671 1,410
- Non-medical costs 319 257 363 311 166
Source: own calculations

Table A6. Sensitivity to AD health model assumptions, mortality parameters

(NPV; 8.0% p.a. discount rate)
Background
Mortality Excess stage 1 mortality
Baseline -25% +25% (50% of stage 2 mortality)
ΔNPV GDP (billion US$) 7,962 7,941 7,985 7,313
1.25% 1.24% 1.25% 1.15%
ΔNPV GDP per capita (US$) 253.4 265.2 242.0 209.5
0.89% 0.93% 0.85% 0.74%
ΔNPV GDP per patient case-year
(US$) 45,328 45,040 45,649 48,609
Decomposition 1
- Mortality 901 819 982 1,142
- Stage 1 3,585 3,580 3,590 3,073
- Stage 2 3,478 3,544 3,415 3,100
Decomposition 2
Patient-specific labor force
reduction
- Mortality 901 819 982 1,142
- Morbidity 1,286 1,323 1,254 1,207
Caregiver labor force reduction
- Formal caregiving 1,924 1,934 1,914 1,662
- Informal caregiving 798 801 795 685
Other costs
- Medical costs 2,731 2,743 2,719 2,348
- Non-medical costs 319 319 319 268
Source: own calculations
Looking at sensitivity analyses of non-mortality AD model parameters, a decrease in transition time
to stage 2 (from 6 to 4 years) decreases the economic burden to US$7.75trillion, whilst increasing
the transition time (from 6 to 8 years) increases the economic burden to US$8.14trillion. The
relatively small (±2-3%) changes suggest that our simulation results are only weakly sensitive to our
choice of transition probabilities or transition times.

Introduction of constant rather than exponential incidence rates beyond age 90 reduces the disease
burden to US$7.83trillion, while a uniform reduction of incidence rates by 50% for all ages reduces
the economic burden to US$4.09trillion. These reductions equate to approximately 1.7% and 48.7%,
respectively, and thereby confirm that our economic burden estimate is robust to sub-group
variations in incidence rates, and that general reductions in incidence across ages are likely to
produce proportional changes in AD economic burden estimates.

Looking at the sensitivity analyses of mortality parameters (Table A6), introducing ‘stage 1 excess
mortality’ equivalent to half of the stage 2 excess mortality reduces the economic burden to
US$7.31trillion. The 8.1% reduction indicates that the economic burden is mildly sensitive to the
excess mortality assumption. Increased stage 1 mortality leads to a reduction in the aggregate
number of stage 1 and stage 2 AD patients. This lowers the number of AD sufferers who could
potentially have been in the workforce, and this has the added effect of lowering the required
number of caregivers and the required amount of medication needed for caregiving. Overall, the
sensitivity result is in line with the ‘gift of the dying’-literature23, highlighting the counter-intuitive
impact of increased AD mortality on reduced AD economic burden.

Finally, our NPV GDP economic burden estimate showed very little sensitivity to changes in
‘background mortality’. A reduction in background mortality rates by 25% reduces the economic
burden to US$7.94trillion, while a similar 25% increase in background mortality increases the
economic burden to US$7.99trillion, a change of ±0.3%.

Detailed sensitivity analyses of the ratio of formal to informal care

The literature on quantities of formal and informal caregiving for AD patients in China is relatively
sparse. Our estimates of formal-to-informal caregiver time use ratios have been taken from a
Shanghai-specific study20, but due to limited evidence it is difficult to determine how representative
this ratio is for the national level of Chinese society including both rural and urban areas. Our model
focuses on the national level, with an explicit distinction between urban and rural areas. We
therefore carried out a set of sensitivity analysis of the formal-to-informal caregiver ratio at the
national level, by varying the 2011 ratio of formal-to-informal care among 7 equally spaced ratios
ranging from 0% formal care to the Shanghai formal-to-informal care ratio, and assuming a linear
conversion to the Shanghai rates by 2050. Results are presented in Table A7.

The economic disease burden estimates from these sensitivity analyses varied from the baseline by
less than 5% (US$395miliion), revealing that, even starting from a very low ratio of formal-to
informal-care, our baseline economic burden estimates remain fairly robust to variation in these
assumptions.
Table. A7 2011-2050 China AD disease burden sensitivity analysis: long-term formal-informal care time allocation (NPV; 8.0% p.a. discount rate)
Sensitivity analysis: variation in Initial period (2011) formal-informal care time allocation*
Scenario 1: Scenario 2: Scenario 3: Scenario 4: Scenario 5: Scenario 6: Scenario 7:
China = 0% of China = 17% of China = 33% of China = 50% of China = 67% of China = 83% of China = 100%
Shanghai Shanghai Shanghai Shanghai Shanghai Shanghai of Shanghai
formal-to- formal-to- formal-to- formal-to- formal-to- formal-to- formal-to-
informal time informal time informal time informal time informal time informal time informal time
use ratio use ratio use ratio use ratio use ratio use ratio use ratio
ΔGDP (bn US$) 7,568 7,633 7,699 7,765 7,830 7,896 7,962
ΔGDP (%) 1.19% 1.20% 1.21% 1.22% 1.23% 1.24% 1.25%
ΔGDP per capita (US$) 236.0 238.9 241.8 244.7 247.6 250.5 253.4
0.83% 0.84% 0.85% 0.86% 0.87% 0.88% 0.89%
ΔGDP per patient case (US$) 43,078 43,453 43,828 44,203 44,578 44,953 45,328

Source: own calculations; *assumed linear convergence from scenario-specific time allocation in initial period (2011) to Shanghai formal-informal time allocation in long
term (by 2050)
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