Valuing Morbidity Using Willingness to Pay and Health Utility Measures

EPA Grant Number: R831593
Title: Valuing Morbidity Using Willingness to Pay and Health Utility Measures
Investigators: Hammitt, James K. , Haninger, Kevin
Institution: Harvard University
EPA Project Officer: Hahn, Intaek
Project Period: January 15, 2005 through January 14, 2007 (Extended to January 14, 2009)
Project Amount: $333,396
RFA: Valuation for Environmental Policy (2003) RFA Text |  Recipients Lists
Research Category: Economics and Decision Sciences

Objective:

This project is aimed at improving the valuation of environmental health risks. The broad goal of the work is to determine the feasibility of developing credible and accurate values of reducing morbidity risk that can be widely applied or transferred when estimating the benefits of environmental policies. More specifically, we propose to design and conduct a stated preference survey to examine the following research questions:

1. What is the relationship between willingness to pay (WTP) and quality adjusted life year (QALY) losses for environmental health risks that vary in the duration and severity of symptoms, in the attributes of health that are impaired, and in whether the illness is identified by name? Can changes in health-related quality of life (HRQL) measured by a generic index of health status be used as a proxy for specific morbidity risks?

2. How does the value of reducing morbidity risks to children compare with the value of reducing similar morbidity risks to adults?

3. How does the value of reducing morbidity risks depend on whether the risk reduction is obtained through public or private mechanisms?

4. How does the value of reducing morbidity risks depend on respondent characteristics such as health, age, and wealth?

Approach:

We will design and conduct a survey to elicit values for reductions in environmental health risks that vary in the duration and severity of symptoms, in the attributes of health that are impaired, and in whether the illness is identified by name. We will elicit values for risks to children vs. adults, and we will elicit WTP for risk reductions provided through both public and private mechanisms. In addition, we will vary the magnitude of risk reduction to test whether the WTP estimates are sensitive and proportional to changes in morbidity risk. Survey respondents will include both parents and non-parents to allow comparison with prior studies of the value of reducing risks to adults and to estimate the relative value of reducing health risks to children. For each risk, we will we use information reported by respondents to calculate two types of value: WTP to reduce the risk, and the expected gain in QALYs based on the HRQL that the respondent assigns to the illness and the stated duration of illness (for acute episodes) or the respondent’s or child’s life expectancy (for chronic conditions). WTP will be elicited using contingent valuation or conjoint analysis. HRQL will be elicited using the standard gamble over health states constructed with the Heath Utilities Index Mark 3, a generic health-status classification and index. The survey will be administered over the World Wide Web, which will facilitate the presentation of audio and visual aids to assist in communicating the magnitude of risks to survey respondents.

Expected Results:

The project is anticipated to provide estimates of the value of reducing environmental health risks to children and adults, as well as analysis of how EPA can integrate health-utility measures with estimates of WTP for reductions in morbidity risk. EPA can use these results to evaluate the benefits of environmental policies.

Supplemental Keywords:

cost-benefit, cost-effectiveness, preferences, utility, RFA, Scientific Discipline, Economic, Social, & Behavioral Science Research Program, Health Risk Assessment, Economics, decision-making, Ecological Risk Assessment, Economics & Decision Making, Social Science, ecosystem valuation, policy analysis, belief system, policy making, valuation, health utility measures, decision analysis, decision making, environmental decision making, valuation of mortality, morbidity risks, environmental policy, mortality, willingness to pay, econometric analysis

Progress and Final Reports:

  • 2005 Progress Report
  • 2006 Progress Report
  • 2007 Progress Report
  • Final