A compensating income variation approach to valuing 34 health conditions in Iceland

Putting a price on pain: The monetary compensation needed to offset welfare losses due to violence

Efficiency calculations of violence prevention are likely to be severely biased if the hard-to-measure value of utility reductions due to victimization is not included. We measure the monetary compensation needed to offset the welfare loss associated with being subjected to violence, by applying the compensating-income-variation method to data from an Icelandic health-and-lifestyle survey carried out in 2017. We examine differences in the monetary compensation needed by (i) types of violence, (ii) duration since the exposure, and (iii) the relationship with the perpetrator. Our results show that the average compensation needed to offset the welfare loss due to psychological violence is $43,750 per year, $22,202 per year for sexual violence, and $10,938 per year for physical violence. Further, we find that the monetary compensation needed is highest when the perpetrator is a spouse or an ex-spouse, and when the violence happened recently.

How sensitive is the compensating income variation to severity and adaptation?

Knowing the monetary value individuals place on health is essential in tackling resource allocation between health and other uses. However, health conditions vary greatly, not only with respect to main characteristics but also by severity and duration. We apply the compensating income variation (CIV) method to data from the Swiss Household Panel, years 2004-2019, to explore the sensitivity of CIV estimates to severity and adaptation across five different health conditions: headaches, back problems, sleep problems, fatigue, and chronic illness. Accounting for income endogeneity in the life-satisfaction equations and adjusting for individual random effects, we found the CIV estimates to range from $3184 for moderate headaches (women) to $100,066 for severe fatigue (men). Individuals with severe conditions needed to be compensated about three times more than those suffering less. Across the five conditions with two severity levels explored for adaptation, individuals only adapted to moderate headaches and severe sleep problems. In conclusion, not only does the value of health conditions vary greatly, but within each health condition its value on average triples when severe condition is reported as opposed to moderate. Adaptation plays a minor role in CIV estimates for the five health conditions explored.

Life satisfaction and body mass index: estimating the monetary value of achieving optimal body weight

According to the World Health Organization, obesity is one of the greatest public-health challenges of the 21st century. Body weight is also known to affect individuals' self-esteem and interpersonal relationships, including romantic ones. We estimate the "utility-maximizing" Body Mass Index (BMI) and calculate the implied monetary value of changes in both individual and spousal BMI, using the compensating income variation method and data from the Swiss Household Panel. We employ the Oster's method (Oster, 2019) to estimate the degree of omitted variable bias in the effect of BMI on life satisfaction. Results suggest that the optimal own BMI is 27.1 and 20.1 for men and women, respectively. The annual value of reaching optimal weight ranges from $7069 for women with underweight to $88,709 for women with obesity and between $95,165 for men with underweight to $32,644 for men with obesity. On average, women value reduction in their own BMI about four times higher than reduction in their spouse's BMI. Men, on the other hand, value a reduction in their spouse's BMI almost twice as much compared to a reduction in their own BMI. This highlights important gender differences and relative effects based on spousal BMI.

Valuation of health losses of women with multiple roles using a well-being valuation approach: Evidence from Japan

Unpaid housework among married working couples is largely done by women in Japan, causing health losses due to work-to-family conflict. However, monetary values for the poor health condition of working mothers with multiple roles have not been explored. The purpose of this study is to examine the impacts of health conditions on life satisfaction (LS) among middle-aged Japanese men and women and attach a monetary value to self-assessed poor health (SAPH). The well-being valuation approach applied monetary values to health losses among middle-aged working persons, using a total of 6,779 married workers drawn from a nationwide 6 wave (2007, 2009, 2011-2014) longitudinal data from the Japanese Life Course Panel Survey of Middle-aged Persons. Female workers having multiple roles as employees and housewives, who spent at least 35 hours per week on market work are defined as women with multiple roles. LS was used as a proxy of individuals' subjective well-being. Considering the endogeneity between SAPH and LS, I used the two-stage residual inclusion approach with generalized residuals. Major findings are (1) health losses of women with multiple roles were 1.47 times of the equivalent household income; larger than those of men with multiple roles, and (2) health losses of women with multiple roles can be reduced by around 9.5% of the equivalent household income if the spouse shares the housework by engaging in frequent cleaning of the house. Taking health losses of women with multiple roles into consideration, middle-aged men should reconsider the allocation of work attributable to the attitudes toward gender roles.

Valuing pain using the subjective well-being method

Chronic pain clearly lowers utility, but valuing the reduction in utility is empirically challenging. Here, we use improvements over prior applications of the subjective well-being method to estimate the implied trade-off between pain and income using four waves of the Health and Retirement Study (2008-2014), a nationally representative survey on individuals age 50 and older. We model income with a flexible functional form, allowing the trade-off between pain and income to vary across income groups. We control for individual fixed effects in the life-satisfaction equations and instrument for income in some models. We find values for avoiding pain ranging between 56-145 USD per day. These results are lower than previously reported and suggest that the higher previous estimates may be heavily affected by the highest income level and confounded by endogeneity in the income variable. As expected, we find that the value of pain relief increases with pain severity.