||Morbidity Valuation, Benefit Transfer and Family Behavior. Final Technical Report: June 30, 2011.
M. Dickie ;
||University of Central Florida, Orlando.; Environmental Protection Agency, Washington, DC. National Center for Environmental Economics.
Benefit cost analysis ;
Heart disease ;
Risk reduction ;
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The project estimates parents willingness to pay to reduce their own and their children's risks of heart disease and tests whether a standard economic framework for modeling 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 altruistic, utility-maximizing parents and household production of morbidity risks. It extends prior work by allowing, in two-parent households, for each parent to have a distinct valuation for reducing the child's risk, and accounts for the preferences and risk beliefs of both parents in determining family willingness to pay to reduce risk. Key predictions of the model that are tested in the project are that: (1) the value of morbidity risk reduction to adults and children is equal to the marginal cost of risk reduction. (2) The value of morbidity risk reduction to children in two-parent families is determined as the sum of each parent's willingness to pay to reduce the child's risk. These predictions in turn imply that (3) a family's marginal rate of substitution between morbidity risk to a parent and to a child is equal to the corresponding ratio of marginal risk reduction costs.