Baseline Risk And Marginal Willingness To Pay For Health Risk Reduction

Keywords

Baseline risk; Children’s morbidity risk; Endogenous risk; Health risk; Heart disease; Morbidity; Willingness to pay

Abstract

Empirical results presented in this paper suggest that parents’ marginal willingness to pay (MWTP) for a reduction in morbidity risk from heart disease is inversely related to baseline risk (i.e., the amount of risk initially faced) both for themselves and for their children. For instance, a 40% reduction from the mean of baseline risk results in an increase in MWTP by 70% or more. Thus, estimates of monetary benefits of public programs to reduce heart disease risk would be understated if the standard practice is followed of evaluating MWTP at initial risk levels and then multiplying this value by the number of cases avoided. Estimates are supported by: (1) unique quantitative information on perceptions of the risk of getting heart disease that allow baseline risk to be defined at an individual level and (2) improved econometric procedures to control for well-known difficulties associated with stated preference data.

Publication Date

12-1-2017

Publication Title

Journal of Risk and Uncertainty

Volume

55

Issue

2-3

Number of Pages

177-202

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.1007/s11166-017-9267-x

Socpus ID

85037993660 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/85037993660

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