Estimating the monetary value of health care: lessons from environmental economics

Abstract

In the recent past, considerable effort in health economics has been made on applying stated preference methods such as contingent valuation and choice experiments. Despite this increased use, there is still considerable scepticism concerning the value of these approaches. The application of contingent valuation in environmental economics has a long history and has been widely accepted. Whilst choice experiments were introduced to the environmental and health economics literature at a similar time, the wider acceptance of monetary measures of benefit in environmental economics has meant that they have also been more widely applied. The purpose of this paper is to identify some of the key issues and debates that have taken place in the environmental economics literature, summarise the state of the art with respect to these issues, and consider how health economists have addressed these issues. Important areas for future research in health economics are identified.

Preferences of Hungarian consumers for quality, access and price attributes of health care services — result of a discrete choice experiment

“…Stated preference methods are frequently applied within the framework of cost-benefit analysis, mainly in the field of health, environmental and transport economics, to advise on the social desirability of providing various commodities and services using public resources (see Hanley et al 2003;Lancsar -Louvier 2008;Ryan et al 2001;Ryan -Gerard 2003;Telser -Zweifel 2002;Vroomen -Zweifel 2011).…”

Valuing a Statistical Life Year in Relation to Clean Air

“…CVM is an empirical technique for estimating non-market values defined within the standard neo-classical model of valuation (Hanley et al, 2003). When health benefits from reduced pollution are analysed in monetary terms, CVM is used to elicit, by means of surveys, people's WTP to forego adverse health effects including premature mortality (Pervin et al, 2008).…”

Willingness to pay methods in health care: a sceptical view

“…Recently, several experts in stated preference willingness to pay (WTP) methods have advocated greater use of these methods to facilitate cost-benefit analysis in health care [1][2][3]. The suggestion is that health economics lags behind other areas of economics that have embraced these methods, in particular environmental economics.…”

“…Advocates of WTP methods suggest it may be partly due to a common but erroneous perception that WTP studies are 'somehow supportive of policies aimed at removing the provision of state-supplied health services' [1]. It may also be due to the fact that stated preference WTP methods suffer from two serious (and possibly related) measurement biases that render them unattractive to health care decisionmakers.…”

“…WTP methods thus tend to be biased in favour of (1) interventions that deliver relatively small benefits, and (2) the particular intervention being evaluated, as opposed to other ones not being evaluated. These are serious flaws in a health care context, where the bulk of economic evaluation activity is directed towards informing reimbursement decisions about costly new health care technologies.…”