Improving Methods for Morbidity Valuation and Benefit Transfer

EPA Grant Number: R833263
Title: Improving Methods for Morbidity Valuation and Benefit Transfer
Investigators: Dickie, Mark , Gerking, Shelby
Institution: University of Central Florida
EPA Project Officer: Hahn, Intaek
Project Period: October 1, 2006 through September 30, 2008
Project Amount: $465,093
RFA: Valuation for Environmental Policy (2005) RFA Text |  Recipients Lists
Research Category: Environmental Justice

Objective:

The project would estimate parents’ willingness to pay to reduce their own and their children’s risks of heart disease would test whether a standard inter-temporal model of family behavior can be used to accurately value morbidity risk reductions and to improve methods for transferring health benefit estimates from adults to children. The model envisions an altruistic, utility-maximizing parent and household production of latent morbidity risks. Key predictions of the model to be tested are that (1) the value of morbidity risk reduction to adults and to children is equal to the marginal cost of achieving it, and (2) a parent’s marginal rate of substitution between morbidity risk to herself and to her child is equal to the corresponding ratio of present value marginal risk reduction costs.

Approach:

A field experiment would be administered to a sample of 1,500 parents drawn from the Central Florida region to collect data needed to test the model and to estimate parents’ willingness to pay to reduce risks of morbidity outcomes associated with coronary heart disease. Data would be collected from a sample of adult parents of children under the age of 18 and living at home using a self-paced, interactive, computerized instrument. The instrument would: (1) assess how parents allocate resources between themselves and their children; (2) provide information about (ischemic) heart disease and elicit parents’ beliefs about their own risk and their children’s risk of experiencing adverse health outcomes related to heart disease; (3) assess current-period and inter-temporal tradeoffs parents make between their children’s risk of heart disease and their own risk of heart disease based on both stated-preference and revealed-preference methods; and (4) collect demographic information.

Expected Results:

Models of family behavior have been applied in health valuation studies but have seldom been tested. A compelling case can be made to test the model predictions enumerated above for two reasons. First, it is not feasible to conduct separate morbidity valuation studies for each of the large number of illness risks that have been associated with exposure to environmental hazards. Second, studies of adult willingness to pay for reduced morbidity, while scarce, still outnumber those for children. Results of the study would have three additional advantages over earlier work. First, implications of the model would be tested using data on actual as well as on stated purchase intentions. Second, a broad range of model implications would be tested. For instance, whether parents’ marginal rates of substitution between morbidity risk to their children and to themselves are equal to corresponding ratios of marginal costs would be tested in an inter-temporal context, not just in a current period framework. Third, discount rates parents apply would be allowed to vary over time, rather than be assumed constant.

Supplemental Keywords:

morbidity valuation, benefit transfer, revealed preference, stated preference, children’s health, nonmarket valuation, benefit estimation, heart disease,

Progress and Final Reports:

  • 2007
  • Final