Intangible Cost

Intangible Cost in Economic Evaluation and Cost-of-Illness Studies

Intangible cost is the label health economists give to the suffering that illness and its treatment cause, such as pain, distress, grief and the loss of ordinary enjoyment of life. It differs from the resources used for care and from the production lost through illness, because no market transaction takes place and nothing is bought or sold. Cost-of-illness studies have long listed intangible costs as a third category beside direct and indirect costs, yet they are rarely given a figure, and leaving them out can understate the burden of a disease by a wide margin. In a cost-utility analysis the same suffering normally enters through quality-adjusted life years, so the practical question is where the burden is counted and how to avoid counting it twice.

Where intangible costs sit among cost categories

Jo, in a 2014 review of cost-of-illness study methods, notes that such studies traditionally stratify costs into direct, indirect and intangible costs. Direct cost covers the resources used in providing care and in coping with the illness. Indirect cost, in this literature, can refer to productivity losses through morbidity and mortality, which is why Jo reports the suggestion that the term productivity costs be used instead. Jo describes the remaining welfare losses from disease as losses in healthy time resulting from pain, suffering and grief, and observes that intangible costs have seldom been quantified because of measurement difficulties and related controversies.

A 2026 systematic review protocol on leptospirosis lists the cost of functional limitations, pain, psychological distress, suffering due to illness and decreased social interactions, and contrasts these with tangible costs that are easily valued in money. A study of multiple sclerosis in Catalonia describes intangible costs related to pain, anxiety and helplessness and argues that cost-of-illness studies of the disease tend to underestimate them. Relatives and friends can bear intangible costs too, through grief and the strain of caring.

Intangible cost is therefore a type of cost defined by the wellbeing lost, with no resource consumed. Pain uses no staff time or medicine, so no ledger or tariff can price it.

Intangible costs inside the QALY in cost-utility analysis

In a cost-utility analysis, suffering is measured as lower health-related quality of life and enters the denominator through the QALY. The EuroQol Group describes the EQ-5D-5L descriptive system as having five dimensions, mobility, self-care, usual activities, pain/discomfort and anxiety/depression, so two dimensions record what cost-of-illness studies call intangible. A patient in severe pain reports a worse health state, the state carries a lower health state utility value, and time spent in it yields fewer QALYs.

NICE's manual for technology appraisal and highly specialised technologies (PMG36) builds this into the reference case. Section 4.3.1 asks for health effects to be expressed in QALYs, with changes in health-related quality of life reported directly by patients and valued by public preferences using a choice-based method, and section 4.3.6 names the EQ-5D as the preferred measure in adults. On the cost side, section 4.2.7 sets the perspective as the NHS and personal social services (PSS), and section 4.4.1 states that reference-case costs should relate to resources under the control of the NHS and PSS. A money value for pain is not such a resource, so in the reference case the patient's suffering appears only as a QALY loss.

Johannesson, writing on double counting in pharmacoeconomic studies, explains that some consequences can in principle be included both in the costs and in the quality adjustment of QALYs. Johannesson's examples are healthcare costs and income losses, and the same logic applies to pain. Once pain has lowered the utility weight, adding a monetary value for that pain to the cost total counts the same consequence twice and makes a treatment that relieves it look better than the evidence supports.

Putting a money value on intangible costs

A money value is needed when an analysis reports a total societal burden in currency, as cost-of-illness studies do, or sets health against other benefits in a cost-benefit analysis. Three families of method are in use.

The first family multiplies QALYs lost by a money value per QALY. Wundes and colleagues reviewed thirteen studies across ten countries that valued intangible costs of multiple sclerosis in this way and found that intangible costs accounted for 17.5% to 47.8% of total costs. They also noted that, because no value per QALY has been established as acceptable, the estimates depend on the threshold chosen. A 2025 United States study of Alzheimer's disease, which derived intangible costs to patients and caregivers from a patient and caregiver survey, found that they made up 24% to 32% of societal costs. The QALY loss itself depends on the instrument. In a study of drug and alcohol dependence, Casal, Rodríguez-Míguez and Rivera found that the estimated impact on health-related quality of life changed with the preference-based instrument used, a pattern they linked to a ceiling effect in the EQ-5D-5L and a floor effect in the standard gamble version of the SF-6D.

$$IC = N \times \Delta u \times t \times v$$

where $IC$ is the intangible cost in money, $N$ is the number of people with the condition, $\Delta u$ is the shortfall in utility compared with a matched population without the condition, $t$ is the time in years over which the shortfall lasts and $v$ is the money value placed on one QALY.

The second family asks people directly what they would pay to avoid a described experience, through contingent valuation or related stated preference methods based on willingness to pay. Transport Scotland, reporting the Department for Transport method for road casualties in 2022, states that casualty values rest on a willingness to pay approach, and that the human cost reflects the pain, grief and suffering to the casualty, relatives and friends and, for fatal casualties, the intrinsic loss of enjoyment of life over and above the consumption of goods and services.

The third family infers a value from survey data on life satisfaction. Meng, Nie and Sousa-Poza estimated the intangible costs of overweight and obesity in Germany as the income needed to compensate the life satisfaction lost, which they compute as the marginal rate of substitution between income and the condition, a linear approximation for a condition coded as present or absent.

$$CV = -\frac{\beta}{\delta} \times Y$$

where $CV$ is the compensating income per year, $\beta$ is the change in life satisfaction associated with the condition, $\delta$ is the coefficient on the natural logarithm of income in the same regression and $Y$ is income. The authors report wide 95% confidence intervals for the regression coefficients, which put obesity costs at about EUR 21,000 to EUR 64,000, and note that such large intervals are commonplace in life satisfaction studies.

Worked example of valuing and counting an intangible cost (illustrative)

All figures in this example are illustrative. A chronic condition affects 10,000 adults. Their mean utility is 0.65, against 0.85 in a matched general population, so the shortfall is 0.20 for each year lived with the condition. Annual direct costs are GBP 4,000 per patient and productivity costs are GBP 2,500.

1. QALY-based intangible cost. With a value of GBP 30,000 per QALY, the annual intangible cost per patient and for the whole group is calculated as follows.

$$0.20 \times 30000 = 6000 \qquad 10000 \times 6000 = 60000000$$

where 0.20 is the utility shortfall, 30,000 is the illustrative value per QALY in pounds and 10,000 is the number of patients. The intangible cost is GBP 6,000 per patient, or GBP 60 million a year.

2. Share of the total. The tangible cost per patient is 4,000 + 2,500 = 6,500, and adding the intangible cost gives 6,500 + 6,000 = 12,500. The intangible share is 6,000 divided by 12,500, or 48%. At a value of GBP 15,000 per QALY the intangible cost falls to 0.20 × 15,000 = 3,000, the total to 9,500, and the share to about 31.6%, so the value per QALY drives the headline figure.

3. Life satisfaction method. Suppose a regression on survey data gives $\beta = -0.15$ points of life satisfaction with the condition and an income coefficient $\delta = 0.60$, for people with incomes of GBP 30,000.

$$CV = \frac{0.15}{0.60} \times 30000 = 7500$$

where 0.15 is the life satisfaction loss, 0.60 is the coefficient on log income and 30,000 is income in pounds. The compensating income of GBP 7,500 a year differs from the QALY-based GBP 6,000, so the method chosen moves the result.

4. The same burden in a cost-utility analysis. A new treatment raises utility from 0.65 to 0.75, a gain of 0.10 QALYs per patient per year, at an incremental cost of GBP 2,000. The incremental cost per QALY is 2,000 / 0.10 = 20,000. If the analyst also subtracted the avoided intangible cost, 0.10 × 30,000 = 3,000, from the incremental cost, the treatment would appear to save GBP 1,000 per patient while still gaining 0.10 QALYs, and would look dominant. The relief of suffering would then count once in the QALY gain and again as a saving.

5. Interpretation. The GBP 60 million figure shows the scale of suffering in a burden study, provided the value per QALY and the instrument are stated. In the cost-effectiveness comparison the correct result is GBP 20,000 per QALY, with the intangible benefit already inside the 0.10 QALY gain.

Effects that fall outside the QALY

Some intangible effects escape the patient's own utility measure, so an analysis should say where each is counted. Effects on carers are the clearest case, since the patient's EQ-5D does not record them. PMG36 section 4.2.7 defines the reference-case perspective on outcomes as all relevant health effects for patients or, when relevant, other people (mainly carers), and section 4.3.17 asks for evidence that the condition has a substantial effect on carers' health-related quality of life before such effects are presented. Measures of caregiver burden and caregiver quality of life capture them.

Other effects lie partly or wholly outside health. PMG36 section 4.2.8 refers to process characteristics, such as convenience and information for patients, which may affect health only indirectly, and asks for their value to be quantified if possible and their nature to be explained. Meng and colleagues argue that economic evaluations of obesity interventions measure outcomes only in health-related terms and so ignore effects on general wellbeing beyond health-related quality of life. Where such effects matter, a wellbeing or capability instrument or a cost-consequence analysis that reports them separately keeps them visible without placing them in the cost total.

Misreadings of intangible cost

The first misreading treats intangible as meaning small or optional. The studies above found shares of 17.5% to 47.8% of total costs in multiple sclerosis and 24% to 32% of societal costs in Alzheimer's disease, so a burden of illness estimate without them can describe a different disease from the one patients experience.

The second treats a QALY-based figure as an observed price. The money value per QALY used in burden studies is a chosen parameter, often borrowed from a willingness-to-pay threshold, not a market price. Reporting results under more than one value, and naming the utility instrument, makes the estimate reproducible.

The third mixes frameworks. Adding a monetary intangible cost to the cost side of a cost-utility analysis double counts, while leaving it out of a cost-of-illness total understates the burden. The fourth confuses categories. Indirect cost in cost-of-illness work commonly means lost production, valued by the human capital approach or the friction cost method, which is a separate loss from pain and grief.

Sources

• Casado V, Romero L, Gubieras L, et al. An approach to estimating the intangible costs of multiple sclerosis according to disability in Catalonia, Spain. Multiple Sclerosis. 2007;13(6):800-804. doi:10.1177/1352458506073480
• Casal B, Rodríguez-Míguez E, Rivera B. Measuring intangible cost-of-morbidity due to substance dependence: implications of using alternative preference-based instruments. European Journal of Health Economics. 2020;21(7):1039-1048. doi:10.1007/s10198-020-01196-7
• EuroQol Group. EQ-5D-5L. https://euroqol.org/information-and-support/euroqol-instruments/eq-5d-5l/ (accessed 26 Oct 2026).
• Jayasinghe MS, Warnasekara J, Gunarathna SP, et al. Direct, indirect and intangible costs incurred by leptospirosis patients: the magnitude, aspects and methods of assessing the costs, a systematic review and meta-analysis protocol. BMJ Open. 2026;16(1):e106730. doi:10.1136/bmjopen-2025-106730
• Jo C. Cost-of-illness studies: concepts, scopes, and methods. Clinical and Molecular Hepatology. 2014;20(4):327-337. doi:10.3350/cmh.2014.20.4.327
• Johannesson M. Avoiding double-counting in pharmacoeconomic studies. PharmacoEconomics. 1997;11(5):385-388. doi:10.2165/00019053-199711050-00001
• Meng F, Nie P, Sousa-Poza A. The intangible costs of overweight and obesity in Germany. Health Economics Review. 2023;13:14. doi:10.1186/s13561-023-00426-x
• National Institute for Health and Care Excellence. NICE technology appraisal and highly specialised technologies guidance: the manual (PMG36). London: NICE; published 31 January 2022, last updated 13 October 2026. Sections 4.2.7, 4.2.8, 4.3.1, 4.3.6, 4.3.17 and 4.4.1. https://www.nice.org.uk/process/pmg36
• Tahami Monfared AA, Hummel N, Kopiec A, et al. Integrating intangible costs into societal cost estimates of Alzheimer's disease. Journal of Alzheimer's Disease. 2025;106(4):1288-1299. doi:10.1177/13872877251351591
• Transport Scotland. Reported Road Casualties Scotland 2022. Collision costs, details of calculations. Edinburgh: Transport Scotland. https://www.transport.gov.scot/publication/reported-road-casualties-scotland-2022/collision-costs-details-of-calculations
• Wundes A, Brown T, Bienen EJ, Coleman CI. Contribution of intangible costs to the economic burden of multiple sclerosis. Journal of Medical Economics. 2010;13(4):626-632. doi:10.3111/13696998.2010.525989