Willingness to pay for reductions in health risks when probabilities are distorted

We study the willingness to pay for reductions in health risks when people do not evaluate probabilities linearly, as is commonly assumed in elicitations of willingness to pay, but weight probabilities, as is commonly observed in empirical studies of decision under risk. We show that for the levels of baseline risk typically considered, probability weighting strongly affects willingness to pay estimates and may lead to unstable monetary valuations of health.     

Adverse selection and categorical discrimination in the health insurance markets: the effects of genetic tests

In this paper, the effects of new methods for risk classification, e.g., genetic tests, on health insurance markets are studied using an insurance model with state contingent utility functions. The analysis focuses on the case of treatment costs higher than the patient's willingness to pay where standard models of asymmetric information are not applicable. In this case, the benefit from signing a fair insurance contract will be positive only if illness probability is low. In contrast to the common perception, additional risk classification under symmetric information can be efficiency enhancing. Under asymmetric information about illness risks, however, there can be complete market failure.     

Economic valuation of health risk exposure of restaurant users in Dhaka city

The aim of the study presented in this paper is to estimate the economic cost of health risk exposure of the restaurant users in Dhaka city. In a large-scale survey, 400 restaurant users in Dhaka city belonging to lower-middle to high income group were asked for their preferences for a hypothetical ‘Food Safety Inspection Programme’ using closed ended dichotomous choice contingent valuation questions. The study reveals an average estimated willingness to pay of Tk31 (US$ 0.5) which is 13% of the average restaurant bill per visit per person. Aggregating the overall willingness to pay estimate across the whole population, a reduction in restaurant food-related health risk results in a total economic benefit of Tk2,250 million (US$33million) per year. The study, furthermore, reveals that the respondent' willingness to pay for the Inspection Programme varies with the degree of health risk exposure, respondent' income level, frequency of restaurant visits, the disutility from health risks and the levels of self-protection. Two different health risk indicators, subjective (respondent perceived probability of becoming ill after eating in a restaurant) and objective (experience of negative health incidences from low quality restaurant food), have been used to test the consistency of influence of health risk exposure on stated willingness to pay. Better model fit has been observed with the objective health risk exposure. The results from the statistical models indicate that the offered bid amounts (additional amount of money that the restaurant users need to pay in order to finance the Inspection Programme) affects willingness to pay negatively. We find income, frequency of restaurant visits and health consciousness influencing willingness to pay for the Inspection Programme positively. Finally, our results confirm the hypothesis that willingness to pay for health risk reduction varies positively with the levels of risk exposure independent of the type of indicators (subjective or objective) we use to measure health risk.     

Willingness to pay for rural health insurance through community participation in India

The main objective of this article is to examine the willingness to pay for a viable rural health insurance scheme through community participation in India, and the policy concerns it engenders. The willingness to pay for a rural health insurance scheme through community participation is estimated through a contingent valuation approach (logit model), by using the rural household survey on health from Karnataka State in India. The results show that insurance/saving schemes are popular in rural areas. In fact, people have relatively good knowledge of insurance schemes (especially life insurance) rather than saving schemes. Most of the people stated they are willing to join and pay for the proposed rural health insurance scheme. However, the probability of willingness to join was found to be greater than the probability of willingness to pay. Indeed, socio-economic factors and physical accessibility to quality health services appeared to be significant determinants of willingness to join and pay for such a scheme. The main justification for the willingness to pay for a proposed rural health insurance scheme are attributed from household survey results: (a) the existing government health care provider's services is not quality oriented; (b) is not easily accessible; and, (c) is not cost effective. The discussion suggests that policy makers in India should take serious note of the growing influence of the private sector and people's willingness to pay for organizing a rural health insurance scheme to provide quality and efficient health care in India. Policy interventions in health should not ignore private sector existence and people's willingness to pay for such a scheme and these two factors should be explicitly involved in the health management process. It is also argued that regulatory and supportive policy interventions are inevitable to promote this sector's viable and appropriate development in organizing a health insurance scheme.     

Understanding household demand for indoor air pollution control in developing countries

More than 2 billion people rely on solid fuels and traditional stoves or open fires for cooking, lighting, and/or heating. Exposure to emissions caused by burning these fuels is believed to be responsible for a significant share of the global burden of disease. To achieve widespread health improvements, interventions that reduce exposures to indoor air pollution will need to be adopted and consistently used by large numbers of households in the developing world. Given that such interventions remain to be adopted by large numbers of these households, much remains to be learned about household demand for interventions designed (in part at least) to reduce indoor air pollution. A general household framework is developed that identifies in detail the determinants of household demand for indoor air pollution interventions, where demand for an intervention is expressed in terms of willingness to pay. Household demand is shown to be a combination of three terms: (1) the direct consumption effect; (2) the child health effect; and (3) the adult health effect. While micro-level data are not available to estimate directly this model, existing data and information are used to estimate just the health effects component of household demand. Based on such existing information, it might be concluded that household demand should seemingly be strong given that willingness to pay, based on existing information, is seemingly large compared to costs for common interventions like improved stoves. Given that household demand is not strong for existing interventions, this analysis shows that more clearly focused research on household demand for interventions is needed if such interventions are going to be demanded (i.e. adopted and used) by large numbers of households throughout the developing world. Four priority areas for future research are: (1) improving information on dose-response relationships between indoor air pollution and various health effects (e.g. increased mortality and morbidity risks); (2) improving information on impacts from interventions in terms of air pollution reductions and also cooking times, fuel use, and heat intensities; (3) improving information on household shadow values for improved health, with separate information for adult and child health; and (4) considering more directly household information, and its adequacy, for their ability to evaluate the relationships between fuel use and health.     

Household health-seeking behaviour in Khartoum, Sudan: the willingness to pay for public health services if these services are of good quality

In this paper, we analyse the extent of willingness to pay for good quality public health services in relation to the demographic and socio-economic characteristics of respondents. The analysis was carried out by way of a household survey conducted in Khartoum, Sudan in 2001. We studied willingness to pay by means of a contingent valuation method. A logistic regression model was used for the statistical analysis. The results show that the overall percentage of people who are willing to pay for good quality public health services is either 80% or 75% depending on whether respondents already pay for these services (group 1) or not (group 2). They show that although the two groups are willing to pay for good quality public health services, the demographic characteristics that affect the willingness to pay differ between the two groups. The results of the logistic regression analysis for each group are remarkably similar. We conclude that if the quality of services is improved, reasonable fees could be set. This supports the continuity of the policy to recover costs because virtually the majority of the households would be willing to pay reasonable fees.     

Willingness to pay for reduction in fatality risk: an exploratory survey.

Willingness to pay surveys represent one method for measuring the benefit of health and life saving programs. However, the reliability and validity of survey responses to questions concerning the reduction of fatality or injury risks have been questioned. The results of a survey of 77 senior year undergraduate students show that reasonable appearing and consistent responses to willingness to pay questions on car crash protection can be obtained. However, the implied value of life was over 100 times greater for an unidentified life than for the respondent's own life. Also, no relationship was found between willingness to pay responses and variables reflecting respondent's rational considerations. These paradoxical results seem to be due to the mistaken assumptions that people employ rational considerations when responding to willingness to pay questions and that they are capable of matching their responses with the functional relationship (proportionality) underlying implied value of life calculations.     

Willingness to pay for health gains from an international integrated early warning system for infectious disease outbreaks

Recently, due to the corona virus outbreak, pandemics and their effects have been at the forefront of the research agenda. However, estimates of the perceived value of early warning systems (EWSs) for identifying, containing, and mitigating outbreaks remain scarce. This paper aims to show how potential health gains due to an international EWS might be valued. This paper reports on a study into willingness to pay (WTP) in six European countries for health gains due to an EWS. The context in which health is gained, those affected, and the reduction in risk of contracting the disease generated by the EWS are varied across seven scenarios. Using linear regression, we analyse this ‘augmented’ willingness to pay for a QALY (WTP-Q) for each of the scenarios, where ‘augmented’ refers to the possible inclusion of context specific elements of value, such as feelings of safety. An initial WTP-Q estimate for the basic scenario is €17,400. This can be interpreted as a threshold for investment per QALY into an EWS. Overall, WTP estimates move in the expected directions (e.g. higher risk reduction leads to higher WTP). However, changes in respondents’ WTP for reductions in risk were not proportional to the magnitude of the change in risk reduction. This study provided estimates of the monetary value of health gains in the context of a pandemic under seven scenarios which differ in terms of outcome, risk reduction and those affected. It also highlights the importance of future research into optimal ways of eliciting thresholds for investments in public health interventions.

     

Man the risk taker

Most approaches to preventing chronic disease involve changing personal behavior. Appeals to change are often made on the grounds that certain behavior incurs a risk to health, but evaluative studies of health education suggest that this may not be a persuasive argument. Humans have always lived with risks and do not necessarily equate risk with personal danger. Many forces, both social and psychological, underlie the willingness to tolerate risks, and altering familiar behaviors may seem to the individual to be more of a loss than a benefit. If we seek to change health behavior, we must acknowledge this and recognize that factual information on risks will not encourage change unless the change forms part of a broader reappraisal of the person's values. Individual appeals for change will have little impact as long as broader social forces continue to encourage health risk behavior.     

Subject variation more than values clarification explains the reliability of willingness to pay estimates

In a recent article in this journal, Smith offers additional evidence to support his claim that the test-retest reliability of willingness to pay measures increases along with willingness to pay because people take more time to consider their answers for the more highly valued (and therefore more 'expensive') goods. Unfortunately, by repeating a common misconception about what reliability actually measures, he overlooks an alternative explanation for the relationship he observed; namely, that subject variation increases with willingness to pay and that it is this, rather than any reduction in measurement error, that explains his findings. We show that 75% of the increase in reliability comes from increases in subject variation (that is different views about the value of good health), and that the relationship between measurement error and willingness to pay is not as simple as Smith suggests. However, our critique of Smith's paper should not be construed as criticism of the ideas being explored. We need to better understand the responses people give to contingent valuation exercises. Such understanding has to be based on a better appreciation of what reliability is and on more robust testing of alternative hypotheses.     

Scope and scale insensitivities in a contingent valuation study of risk reductions

A contingent valuation study asking willingness to pay (WTP) for reducing the overall death risk as well as the risk for fatal and non-fatal injuries in road traffic accidents was performed in Sweden 1998. Different sub-samples were used to test for scale (different risk reductions) and scope (different outcomes) effects, existence of which implies that a respondent is capable of differentiating a WTP-answer accordingly. The results indicated that respondents needed some reference point for their valuation. For instance, dependent samples showed, contrary to independent ones, a significant difference between WTP of dying from any cause and in a traffic accident for the same relative but different absolute risk reduction. Regarding non-fatal traffic accidents, tests were performed comparing valuation of risk reductions for injuries with different outcomes but identical baseline risks and relative risk reductions. Similar to the case above, dependent samples differentiated their WTP and were willing to pay significantly more for a severe injury than for a slight one, which was not the case for independent samples.     

Patients' willingness to pay for autologous blood donation

Most cost-effectiveness analyses of autologous blood donation show very small health benefits for a substantial increase in resource utilization. However, these analyses do not consider the psychological benefits of peace of mind to patients participating in the program. In order to quantitate these benefits, we employed contingent valuation methodology to measure the willingness of patients undergoing elective surgery, to pay for autologous blood donation. The internal consistency of patient responses was investigated through correlations of willingness-to-pay values with risk perceptions and patient characteristics. Two hundred and thirty-five patients completed the self-administered questionnaire which included demographic, willingness-to-pay and risk perception questions. Median population willingness to pay for autologous blood donation was approximately $900 per patient. In multivariate analysis, willingness to pay varied significantly with dread of allogenic transfusion, perceived risk of requiring a blood transfusion and income. Patients who participate in autologous blood donation programs value the procedure highly and state they are willing to pay significant amounts out of pocket to assure themselves of available autologous blood. Willingness to pay correlated significantly with factors expected to influence value decisions.     

Individual responsibility and health-risk behaviour: a contingent valuation study from the ex ante societal perspective

This study analyzes peoples’ social preferences for individual responsibility to health-risk behaviour in health care using the contingent valuation method adopting a societal perspective. We measure peoples’ willingness to pay for inclusion of a treatment in basic health insurance of a hypothetical lifestyle dependent (smoking) and lifestyle independent (chronic) health problem. Our hypothesis is that peoples’ willingness to pay for the independent and the dependent health problems are similar. As a methodological challenge, this study also analyzes the extent to which people consider their personal situation when answering contingent valuation questions adopting a societal perspective.513 Dutch inhabitants responded to the questionnaire. They were asked to state their maximum willingness to pay for inclusion of treatments in basic health insurance package for two health problems. We asked them to assume that one hypothetical health problem was totally independent of behaviour (for simplicity called chronic disease). Alternatively, we asked them to assume that the other hypothetical health problem was totally caused by health-risk behaviour (for simplicity called smoking disease). We applied the payment card method to guide respondents to answer the contingent valuation method questions.Mean willingness to pay was 42.39 Euros (CI = 37.24-47.55) for inclusion of treatment for health problem that was unrelated to behaviour, with ‘5-10’ and ‘10-20 Euros’ as most frequently stated answers. In contrast, mean willingness to pay for inclusion treatment for health-risk related problem was 11.29 Euros (CI = 8.83-14.55), with ‘0’ and ‘0-5 Euros’ as most frequently provided answers. Difference in mean willingness to pay was substantial (over 30 Euros) and statistically significant (p-value = 0.000).Smokers were statistically significantly more (p-value < 0.01) willing to pay for the health-risk related (smoking) problem compared with non-smokers, while people with chronic condition were not willing to pay more for the health-risk unrelated (chronic) problem than people without chronic condition. This suggests that sub groups of people might differ in terms of abstracting from their personal situation when answering valuation questions from a societal perspective.     

The paradox of the cost and affordability of traditional and government health services in Tanzania

Since the introduction of user fee systems in the government health facilities of most African countries, which shifted part of the burden of financing health care onto the community, affordability of basic health care has been a much discussed topic. It is sometimes assumed that in areas where high levels of spending for traditional treatments are common, people would be able to pay for basic health care at governmental facilities, but may not be willing to do so. However, examining willingness to pay and ability to pay in the broader context of different types of illness and their treatment leads us to a very different conclusion. In the course of a medical-ethnographic study in south-eastern Tanzania, we found evidence that people may indeed be willing, but may nevertheless not be able, to pay for biomedical health care--even when they can afford costly traditional medicine. In this article, we suggest that the ability to pay for traditional treatment can differ from ability to pay for hospital attendance for two main reasons. First, many healers--in contrast to the hospital--offer alternatives to cash payments, such as compensation in kind or in work, or payment on a credit basis. Secondly, and more importantly, the activation of social networks for financial help is different for the two sectors. For the poor in particular, ability to pay for health care depends a great deal on contributions from relatives, neighbours and friends. The treatment of the 'personalistic' type of illness, which is carried out by a traditional healer, involves an extended kin-group, and there is high social pressure to comply with the requirements of the family elders, which may include providing financial support. In contrast, the costs for the treatment of 'normal' illnesses at the hospital are usually covered by the patient him/herself, or a small circle of relatives and friends.     

For Me or for My Relatives? Approximating Self-Protection and Local Altruistic Motivations Underlying Preferences for Public Health Policies Using Risk Perception Metrics

ObjectivesResearch efforts evaluating the role of altruistic motivations behind health policy support are usually based on direct preference elicitation procedures, which may be biased. We propose an indirect measurement approach to approximate self-protection–related and altruistic motivations underlying preferences for public health policies.MethodsOur new approach relies on associations between on the one hand decision makers’ perceived health risk for themselves and for close relatives and on the other hand their observed preferences for health policies that reduce such risks. The approach allows to make a rough distinction between health-related self-protection and local altruistic motives behind preferences for health policies. We illustrate our approach using data obtained from a discrete choice experiment in the context of policies to relax coronavirus-related lockdown measures in The Netherlands.ResultsOur results show that the approach is able to uncover that (1) people who think they have a high chance of experiencing health risks from a COVID-19 infection are more willing to accept a societal or personal sacrifice, (2) people with a higher health risk perception for their relatives have a higher willingness to accept sacrifices than people with a higher health risk perception for themselves, and (3) people who perceive that they have a high risk of dying of COVID-19 have a higher willingness to accept sacrifices than those anticipating less severe consequences of COVID-19.ConclusionsOur method offers a useful proxy metric to distinguish health-related self-protection and local altruism as drivers of citizens’ responses to healthcare policies.     

Is knowledge important? Empirical research on nuclear risk communication in two countries

Increasing audience knowledge is often set as a primary objective of risk communication efforts. But is it worthwhile focusing risk communication strategies solely on enhancing specific knowledge? The main research questions tackled in this paper were: (1) if prior audience knowledge related to specific radiation risks is influential for the perception of these risks and the acceptance of communicated messages and (2) if gender, attitudes, risk perception of other radiation risks, confidence in authorities, and living in the vicinity of nuclear/radiological installations may also play an important role in this matter. The goal of this study was to test empirically the mentioned predictors in two independent case studies in different countries. The first case study was an information campaign for iodine pre-distribution in Belgium (N = 1035). The second was the information campaign on long-term radioactive waste disposal in Slovenia (N = 1,200). In both cases, recurrent and intensive communication campaigns were carried out by the authorities aiming, among other things, at increasing specific audience knowledge. Results show that higher prior audience knowledge leads to more willingness to accept communicated messages, but it does not affect people’s perception of the specific risk communicated. In addition, the influence of prior audience knowledge on the acceptance of communicated messages is shown to be no stronger than that of general radiation risk perception. The results in both case studies suggest that effective risk communication has to focus not only on knowledge but also on other more heuristic predictors, such as risk perception or attitudes toward communicated risks.     

Patients' willingness to take risks in the management of pharyngitis

Choosing a management plan for pharyngitis involves considering the risks and benefits of alternatives. Using a sick-day equivalent scale, this study examined patients' willingness to be ill with pharyngitis compared with their willingness to risk two outcomes: a penicillin reaction and rheumatic fever. On average, patients preferred 1.5 to 2.5 days of illness with pharyngitis over risking a 5-percent chance of developing a mild penicillin reaction. Willingness to risk the outcomes decreased with increasing probabilities of their occurrence. Subjects were more willing to risk a penicillin reaction than rheumatic fever. Healthy subjects receiving sick pay were more willing to risk varying probabilities of a mild penicillin reaction than subjects not receiving sick pay. Patients ill with pharyngitis, however, were not more willing to take similar risks if they received sick pay. Illness may, therefore, modify some aspects of risk-taking behavior. It is reasonable to conclude that some patients with pharyngitis would prefer early antibiotic treatment for the chance of earlier recovery over waiting for throat culture results despite the risk of a penicillin reaction.     

Spatial and temporal risk as drivers for adoption of foot and mouth disease vaccination

Identifying the drivers of vaccine adoption decisions under varying levels of perceived disease risk and benefit provides insight into what can limit or enhance vaccination uptake. To address the relationship of perceived benefit relative to temporal and spatial risk, we surveyed 432 pastoralist households in northern Tanzania on vaccination for foot-and-mouth disease (FMD). Unlike human health vaccination decisions where beliefs regarding adverse, personal health effects factor heavily into perceived risk, decisions for animal vaccination focus disproportionately on dynamic risks to animal productivity. We extended a commonly used stated preference survey methodology, willingness to pay, to elicit responses for a routine vaccination strategy applied biannually and an emergency strategy applied in reaction to spatially variable, hypothetical outbreaks. Our results show that households place a higher value on vaccination as perceived risk and household capacity to cope with resource constraints increase, but that the episodic and unpredictable spatial and temporal spread of FMD contributes to increased levels of uncertainty regarding the benefit of vaccination. In addition, concerns regarding the performance of the vaccine underlie decisions for both routine and emergency vaccination, indicating a need for within community messaging and documentation of the household and population level benefits of FMD vaccination.     

If the price is right: vagueness and values clarification in contingent valuation

The use of willingness to pay to value the benefits of health care is increasing. Much of this work assumes that health preferences are well formed or 'complete' and readily revealed if the right question is asked in the right way. We examined this assumption, seeking evidence in a mixed-methods study that explored the meaning and implications of vague responses to a payment-scale based willingness to pay exercise.One-half of the sample said that their vagueness meant that their maximum willingness to pay was actually greater than the amount that they had previously said it was. Thirty percent agreed that they would probably pay pound 10 more than a sum that they had previously said they would most definitely not pay, if they found this to be the cost of the vaccine. Interview data supported the view that the payment scale had failed to elicit the maximum willingness to pay and that some participants used the information on cost to help clarify their values, in contrast to the theory underpinning willingness to pay. The results suggest a need to consider values-clarification in health economic evaluations.     

Ambiguity preferences for health

In most medical decisions, probabilities are ambiguous and not objectively known. Empirical evidence suggests that people's preferences are affected by ambiguity. Health economic analyses generally ignore ambiguity preferences and assume that they are the same as preferences under risk. We show how health preferences can be measured under ambiguity, and we compare them with health preferences under risk. We assume a general ambiguity model that includes many of the ambiguity models that have been proposed in the literature. For health gains, ambiguity preferences and risk preferences were indeed the same. For health losses, they differed with subjects being more pessimistic in decision under ambiguity. Utility and loss aversion were the same for risk and ambiguity. Our results imply that reducing the clinical ambiguity of health losses has more impact than reducing the ambiguity of health gains, that utilities elicited with known probabilities may not carry over to an ambiguous setting, and that ambiguity aversion may impact value of information analyses if losses are involved. These findings are highly relevant for medical decision making, because most medical interventions involve losses.