Valuation of Childhood Risk Reduction: The Importance of Age, Risk Preferences, and Perspective

Abstract

This article explores two problems analysts face in determining how to estimate values for children's health and safety risk reductions. The first addresses the question: Do willingness-to-pay estimates for health risk changes differ across children and adults and, if so, how? To answer this question, the article first examines the potential effects of age and risk preferences on willingness to pay. A summary of the literature reporting empirical evidence of differences between willingness to pay for adult health and safety risk reductions and willingness to pay for health and safety risk reductions in children is also provided. The second dimension of the problem is a more fundamental issue: Whose perspective is relevant when valuing children's health effects-society's, children's, adults-as-children, or parents'? Each perspective is considered, followed ultimately by the conclusion that adopting a parental perspective through an intrahousehold allocation model seems closest to meeting the needs of the estimation problem at hand. A policy example in which the choice of perspective affects the outcome of a regulatory benefit-cost analysis rounds out the article and emphasizes the importance of perspective.

Quality-Adjusted Life-Years Lack Quality in Pediatric Care: A Critical Review of Published Cost-Utility Studies in Child Health

“…The implication is that, for very young children, some form of proxy inevitably will be used for measurement tasks, whether this be the clinician or the parent. Although parents may be perceived by economists as the more appropriate source of measurement and/or valuation, 33 the potential for interaction between the utility function of the parent and the proxy (their child) for whom he or she is making the measurement/valuation may lead researchers to choose to use clinician judgment to avoid this problem. …”

Parental altruism and the value of avoiding acute illness: are kids worth more than parents?

“…(3)), under the assumption that WTP is lognormally distributed [2,31]. 13 The log-likelihood function for the ith observation is Table 4 Logarithmic surplus function: illness attributes and symptom experiences a (asymptotic z statistics in parentheses) b The log-likelihood value with all parameters except the constant and s set equal to zero is À1243.96. Thus, the null hypothesis of zero slope coefficients would be rejected at less than 1% significance for each specification in the table.…”

“…Parental preferences, along with income and fertility, influence family investments in children [25], and these investments may offset or reinforce effects of public policy [5]. Parental preferences also provide a basis for assessing benefits of improving children's health [13].…”

Use of Contingent Valuation to Elicit Willingness-to-Pay for the Benefits of Developmental Health Risk Reductions

“…Fewer studies have evaluated potential morbidity effects for risks and exposures to children, which generally must be evaluated by parents (Dockins et al 2002). While imperfect, these methods provide policy makers with information on how the general public might trade-off income against reductions in the risk of specific health effects.…”