Alternative approaches to valuing intangible health losses: the evidence for multiple sclerosis

Patient Preferences for Lung Cancer Interception Therapy

Importance

Interception therapy requires individuals to undergo treatment to prevent a future medical event, but little is known about preferences of individuals at high risk for lung cancer and whether they would be interested in this type of treatment.

Objective

To explore preferences of individuals at high risk for lung cancer for potential interception therapies to reduce this risk.

Design, Setting, and Participants

This survey study used a discrete-choice experiment and included hypothetical lung cancer interception treatments with 4 attributes: reduction in lung cancer risk over 3 years, injection site reaction severity, nonfatal serious infection, and death from serious infection. Respondents were assigned to a baseline lung cancer risk of 6%, 10%, or 16% over 3 years. The discrete-choice experiment was administered online (July 13 to September 6, 2022) to US respondents eligible for lung cancer screening according to US Preventive Services Task Force guidelines. Participants included adults aged 50 to 80 years with at least a 20 pack-year smoking history. Statistical analysis was performed from September to December 2022.

Main Outcomes and Measures

Attribute-level preference weights were estimated, and conditional relative attribute importance, maximum acceptable risks, and minimum acceptable benefits were calculated. Characteristics of respondents who always selected no treatment were also explored.

Results

Of the 803 survey respondents, 495 (61.6%) were female, 138 (17.2%) were African American or Black, 55 (6.8%) were Alaska Native, American Indian, or Native American, 44 (5.5%) were Asian or Native Hawaiian or Other Pacific Islander, 104 (13.0%) were Hispanic, Latin American, or Latinx, and 462 (57.5%) were White, Middle Eastern or North African, or a race or ethnicity not listed; and mean (SD) age was 63.0 (7.5) years. Most respondents were willing to accept interception therapy and viewed reduction in lung cancer risk as the most important attribute. Respondents would accept a greater than or equal to a 12.0 percentage point increase in risk of nonfatal serious infection if lung cancer risk was reduced by at least 20.0 percentage points; and a greater than or equal to 1.2 percentage point increase in risk of fatal serious infection if lung cancer risk was reduced by at least 30.0 percentage points. Respondents would require at least a 15.4 (95% CI, 10.6-20.2) percentage point decrease in lung cancer risk to accept a 12.0 percentage point increase in risk of nonfatal serious infection; and at least a 23.1 (95% CI, 16.4-29.8) percentage point decrease in lung cancer risk to accept a 1.2 percentage point increase in risk of death from serious infection. Respondents who were unwilling to accept interception therapy in any question (129 [16.1%]) were more likely to be older and to currently smoke with no prior cessation attempt, and less likely to have been vaccinated against COVID-19 or examined for skin cancer.

Conclusions and Relevance

In this survey study of individuals at high risk of lung cancer, most respondents were willing to consider interception therapy. These results suggest the importance of benefit-risk assessments for future lung cancer interception treatments.

Vaccination under pessimistic expectations in clinical trials and immunization campaigns

We provide one of the first formalizations of a vaccination campaign in a decision-theoretic framework. We analyze a model where an ambiguity-averse individual must decide how much effort to invest into prevention in the context of a rampant disease. We study how ambiguity aversion affects the effort and the estimation of the vaccine efficacy in clinical trials and immunization campaigns. We find that the behaviors of individuals participating in a clinical trial differ from individuals not participating. Individuals who are more optimistic toward vaccination participate more in trials. Their behaviors and efforts are also affected. As a result, because vaccine efficacy depends on unobserved behaviors and efforts, the biological effect of the vaccine becomes difficult to evaluate. During the scale-up phase of a vaccination campaign, provided that vaccine efficacy is established, we show that vaccine hesitancy may still be rational.

Prevention, treatment, and palliative care: The relative value of health improvements under alternative evaluation frameworks

The social value of decreasing health risks can be evaluated using benefit-cost analysis (BCA), cost-effectiveness analysis (CEA), or a social-welfare function (SWF). These frameworks can produce different social preference rankings of interventions depending on how their health effects and costs are distributed in a population. This paper derives social values of marginal decreases in the probability of illness, its severity (decrease in health status), lethality (conditional mortality risk), and cost under BCA, CEA, and three benchmark SWFs: utilitarian, ex ante prioritarian, and ex post prioritarian. The sensitivity of the social values of improvements in health and decreases in cost to individual circumstances are diverse. In contrast, the conditions under which a decrease in risk, severity, or lethality is socially preferred to a decrease in another of these dimensions are identical for BCA, CEA, the utilitarian and ex ante prioritarian SWFs, but can differ for the ex post prioritarian SWF.

Valuing non-marginal changes in mortality and morbidity risk

Many stated-preference studies that seek to estimate the marginal willingness-to-pay (WTP) for reductions in mortality or morbidity risk suffer from inadequate scope sensitivity. One possible reason is that the risk reductions presented to respondents are too small to be meaningful. Survey responses may thus not accurately reflect respondents preferences for health and safety. In this paper we propose a novel approach to estimating the value per statistical life (VSL) or the value per statistical case (VSC) based on larger risk reductions measurable as percent changes. While such non-marginal risk reductions are easier to understand, they introduce well known biases. We propose a methodology to de-bias VSL and VSC estimates derived from the evaluation of non-marginal risk reductions and present a proof of concept using simulated stated preference data.

No Time to Waste: An Appraisal of Value at the End of Life

OBJECTIVES

The use of economic evaluations of end-of-life interventions may be limited by an incomplete appreciation of how patients and society perceive value at end of life. The objective of this study was to evaluate how patients, caregivers, and society value gains in quantity of life and quality of life (QOL) at the end of life. The validity of the assumptions underlying the use of the quality-adjusted life-years (QALY) as a measure of preferences at end of life was also examined.

METHODS

MEDLINE, Embase, CINAHL, PsycINFO, and PubMed were searched from inception to February 22, 2021. Original research studies reporting empirical data on healthcare priority setting at end of life were included. There was no restriction on the use of either quantitative or qualitative methods. Two reviewers independently screened, selected, and extracted data from studies. Narrative synthesis was conducted for all included studies. The primary outcomes were the value of gains in quantity of life and the value of gains in QOL at end of life.

RESULTS

A total of 51 studies involving 53 981 participants reported that gains in QOL were generally preferred over quantity of life at the end of life across stakeholder groups. Several violations of the underlying assumptions of the QALY to measure preferences at the end of life were observed.

CONCLUSIONS

Most patients, caregivers, and members of the general public prioritize gains in QOL over marginal gains in life prolongation at the end of life. These findings suggest that policy evaluations of end-of-life interventions should favor those that improve QOL. QALYs may be an inadequate measure of preferences for end-of-life care thereby limiting their use in formal economic evaluations of end-of-life interventions.

Willingness to pay for reductions in health risks under anticipated regret

In this paper, we study the willingness to pay for reductions in health risks within a framework of anticipated regret. We show that ex post information provision can be a relevant factor for regret theory to account for why people are sometimes so inclined to protect themself against certain types of health risks but not others. In particular, we find that under full resolution of uncertainty disproportionate aversion to large regrets exaggerates willingness to pay estimates. The effect induced by this notion of regret aversion can be interpreted as if regret-averse people overweight risk reductions due to prevention. However, as feedback over forgone acts is missing, the regret aversion effect disappears. Finally, we show that information avoidance induced by regret aversion can significantly bias our evaluation to prefer those health programs that completely eliminate a risk, i.e., the certainty effect.

A fresh look at primary prevention for health risks

The author analyzes how risk preferences affect primary prevention for health risks using Kihlstrom and Mirman (1974) transformation function approach. This ensures consistency of ordinal preferences. Higher risk aversion may increase or decrease optimal prevention depending on a probability threshold. Higher downside risk aversion always has a negative effect on optimal prevention. Our findings corroborate the role of downside risk aversion as an important determinant of optimal prevention for health risks but renders fear of sickness irrelevant. We also point out several unique properties of prevention for health risks compared to financial risks.

Hesitancy Toward a COVID-19 Vaccine

The scientific community has come together in a mass mobilization to combat the public health risks of COVID-19, including efforts to develop a vaccine. However, the success of any vaccine depends on the share of the population that gets vaccinated. We designed a survey experiment in which a nationally representative sample of 3,133 adults in the USA stated their intentions to vaccinate themselves and their children for COVID-19. The factors that we varied across treatments were: the stated severity and infectiousness of COVID-19 and the stated source of the risk information (White House or the Centers for Disease Control). We find that 20% of people in the USA intend to decline the vaccine. We find no statistically significant effect on vaccine intentions from the severity of COVID-19. In contrast, we find that the degree of infectiousness of the coronavirus influences vaccine intentions and that inconsistent risk messages from public health experts and elected officials may reduce vaccine uptake. However, the most important determinants of COVID-19 vaccine hesitancy seem to be distrust of the vaccine safety (including uncertainty due to vaccine novelty), as well as general vaccine avoidance, as implied by not having had a flu shot in the last two years.

Willingness to Pay for Health Improvements Using Stated Preferences: Prevention Versus Treatment

OBJECTIVES

This study aimed to investigate whether there was a difference in willingness to pay (WTP) between prevention and treatment for health benefits of equal magnitude.

METHODS

We used a web-based survey instrument in a sample of the Swedish general population to perform a contingent valuation study assessing the WTP for prevention and treatment. We analyzed the WTP as a continuous variable using a two-part regression model to adjust for a mass point around 0 and a skewed distribution among respondents with a positive WTP.

RESULTS

The study found that people were less willing, on average, to pay at all for prevention than treatment, but those who were willing to pay for prevention had a higher WTP than for treatment. The latter effect was more substantial, and in total mean WTP for prevention was about 85% higher than for treatment.

CONCLUSIONS

The findings from this study contribute to the ongoing discussion on the appropriate cost-effectiveness thresholds by adding prevention as a parameter affecting the demand-side value of health improvements. As such, it can provide support to decision makers in healthcare and in health promotion priority setting.

Theoretical bounds on the value of improved health

Policies that improve health and longevity are often valued by combining expected gains in quality-adjusted life years (QALYs) with a constant willingness-to-pay (WTP) per QALY. This constant is derived by dividing value per statistical life (VSL) estimates by expected future QALYs. We explore the theoretical validity of this practice by studying the properties of WTP for improved health and longevity in a framework that makes minimal assumptions about the shape of an agent's utility function. We find that dividing VSL by expected QALYs results in an upper bound on the WTP for a marginal improvement in the quality of life, as measured by gains in health status or longevity. Calibration results suggest that analysts using this approach to monetize health benefits overestimate the value of a program or policy by a factor of two on average. We also derive a lower bound on the WTP for improved health and longevity that permits a novel empirical test for the descriptive validity of the QALY model. Our calibrations suggest that this lower bound is on average 20% smaller than the actual WTP.

How Does Health Status Affect Marginal Utility of Consumption? Evidence from China

This paper investigates how the deteriorating health status of an individual affects the marginal utility of non-medical consumption in China. By using 2011, 2013 and 2015 China Health and Retirement Longitudinal Study (CHARLS) data, we find that when the number of chronic diseases increases one standard deviation, the marginal utility of consumption will increase by 16.0% and 20.0% for samples of the middle-aged and elderly individuals over 50 and 65 years of age, respectively. This result is to some extent contrary to the findings from the US. Different economic development stages, intergenerational norms and bequest motives may be reasons for these contrasting patterns between China and the US.

The willingness to pay for health improvement under comorbidity ambiguity

Accumulated medical information is necessary to determine comorbidity risk between a primary disease and secondary diseases. However, medical decisions often must be made without conclusive evidence because individuals do not have sufficient information. By introducing ambiguity regarding comorbidities, we describe situations in which individuals face a set of plausible comorbidity risks that determines the correlations between primary and secondary diseases. This study examines the conditions under which the willingness to pay for health improvement is larger with comorbidity ambiguity than without it. This study also examines the effect of changes in ambiguity and ambiguity aversion on the willingness to pay.

Household Labor Supply and the Gains from Social Insurance

The marginal gains from social income insurance programs are captured by the gap in the marginal utility of consumption across states of nature. To identify this gap in the context of the household, this paper offers a new labor-supply based approach that leverages household-level economic interactions and optimality conditions. We demonstrate that, in frameworks of efficient household allocations, spousal labor supply responses to shocks have direct implications for the gains from more generous government benefits to households. We show that this holds for both intensive and extensive margin responses under fairly general conditions. Our analysis illustrates how labor market data can be used for assessing marginal welfare gains in a general class of social insurance schemes, including the large and important programs of disability insurance and survivors benefits. Hence, household labor supply behavior and responses to shocks, which are widely studied in theoretical and empirical work, hold valuable information for the optimal design of social insurance.

Measuring multivariate risk preferences in the health domain

We investigate univariate and multivariate risk preferences for health (longevity) and wealth. We measure attitudes toward correlation and attitudes toward higher order dependence structures such as cross-prudence and cross-temperance, making use of the risk apportionment technique proposed by Eeckhoudt et al. (2007). For multivariate gains, we find correlation aversion and cross-prudence in longevity and wealth. For losses, we observe correlation seeking and cross-imprudence. We do not find clear evidence for cross-temperance. Our results indicate that longevity and wealth are considered to be substitutes for gains, but not for losses. Second, univariate (higher order) risk preferences are comparable for longevity and wealth, although somewhat closer to linearity for wealth. Third, we find evidence that attitudes toward dependence structures in the health domain are sign-dependent.

Advantageous Selection, Moral Hazard, and Insurer Sorting on Risk in the U.S. Automobile Insurance Market

This study quantifies the role of private information in automobile insurance policy choice using data on subjective beliefs, risk preference, reckless driving, the respondent's insurer and insurance policy characteristics merged with insurer-specific quality ratings distributed by independent organizations. We find a zero correlation between ex post accident risk and insurance coverage, reflecting advantageous selection in policy choice offset by moral hazard. Advantageous selection is partly attributable to insurer sorting on consumer attributes known and used by insurers. Our analysis of insurer sorting reveals that lower-risk drivers on attributes observed by insurers obtain coverage from insurers with higher-quality ratings.

New findings from the time trade-off for income approach to elicit willingness to pay for a quality adjusted life year

In this paper we empirically investigate how to appropriately model utility of wealth and health. We use a recently proposed alternative approach to value willingness to pay (WTP) for health, making use of trade-offs between income and life years or quality of life, which we extend to allow for a more realistic multiplicative utility function over health and money. Moreover, we show how reference-dependency can be incorporated into this model and derive its predictions for WTP elicitation. We propose three experimental elicitation procedures and test these in a feasibility study, analysing the responses under different assumptions about the discount rate. Several interesting results are reported: first, the data are highly skewed, but if we trim the 5% lowest and highest values, we obtain plausible WTP estimates. Second, the results differ considerably between procedures, indicating that WTP estimates are sensitive to the assumed utility function. Third, respondents appear to be loss averse for both health and money, which is consistent with assumptions from prospect theory. Finally, our results also indicate that respondents are more willing to trade quality of life than life years.

Baseline risk and marginal willingness to pay for health risk reduction

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.

The Role of Medical Expenditure Risk in Portfolio Allocation Decisions

Economic theory suggests that medical spending risk affects the extent to which households are willing to accept financial risk, and consequently their investment portfolios. In this study, we focus on the elderly for whom medical spending represents a substantial risk. We exploit the exogenous reduction in prescription drug spending risk because of the introduction of Medicare Part D in the U.S. in 2006 to identify the causal effect of medical spending risk on portfolio choice. Consistent with theory, we find that Medicare-eligible persons increased risky investment after the introduction of prescription drug coverage, relative to a younger, ineligible cohort. Copyright © 2016 John Wiley & Sons, Ltd.

A Stated Preference Approach to Assess whether Health Status Impacts on Marginal Utility of Consumption

A sample of Danish citizens (n = 2000) was asked to participate in a hypothetical experiment in which they could self-insure against a certain loss in income across two periods of time (one in which the person is in good health and one in which the person is in poorer health). Our results suggest that reduced health impacts on the marginal utility of consumption, but not in a linear fashion. Amongst a majority of respondents inferior, health increases the marginal utility of consumption for intermediate health states, whereas this is not the case for less and more severe health states. Copyright © 2016 John Wiley & Sons, Ltd.

The value of disease prevention vs treatment

We present an integrated valuation model for diseases that are life-threatening. The model extends the standard one-period value-per-statistical-life model to three health prospects: healthy, ill, and dead. We derive willingness-to-pay values for prevention efforts that reduce a disease's incidence rate as well as for treatments that lower the corresponding health deterioration and mortality rates. We find that the demand value of prevention always exceeds that of treatment. People often overweight small risks and underweight large ones. We use the rank dependent utility framework to explore how the demand for prevention and treatment alters when people evaluate probabilities in a non-linear manner. For incidence and mortality rates associated with common types of cancers, the inverse-S shaped probability weighting found in experimental studies leads to a significant increase in the demand values of both treatment and prevention.

Willingness to Pay per Quality-Adjusted Life Year in a Study of Knee Osteoarthritis

Background. Determining whether a particular medical intervention is cost-effective requires that a threshold of cost per benefit gained be established. As debate continues over the appropriate threshold, we present measures of willingness to pay (WTP) per quality-adjusted life year (QALY) for own health and 2 hypothetical osteoarthritis scenarios. Methods. One hundred ninety-three persons, located through random digit dialing in Harris County, Texas, completed face-to-face interviews collecting demographic information and health preferences using visual analog scale, time tradeoff, standard gamble, and WTP methodologies. Results. The mean WTP/QALY for all methods was lower (range, $1221-$5690/QALY) than many estimates from revealed preference studies and lower than the oft-cited arbitrary cutoff of $50 000. WTP/QALY was highest when participants were judging their personal health improvements as opposed to hypothetical scenarios. There were some significant differences in WTP/QALY across elicitation methodologies for the same scenario. Demographic characteristics were not associated with WTP/QALY measures. Conclusions. The health states and improvements in health evaluated here do not contain a risk of mortality, unlike many situations in which WTP/QALY has been previously evaluated. The lower WTP/QALY values found here may indicate that the presence of a mortality risk reduction substantially increases stated WTP/QALY. Appropriate thresholds for cost-effectiveness may be dependent on the context of a situation, including risk of mortality.

Valuing Reductions in Fatal Illness Risks: Implications of Recent Research

The value of mortality risk reductions, conventionally expressed as the value per statistical life, is an important determinant of the net benefits of many government policies. US regulators currently rely primarily on studies of fatal injuries, raising questions about whether different values might be appropriate for risks associated with fatal illnesses. Our review suggests that, despite the substantial expansion of the research base in recent years, few US studies of illness-related risks meet criteria for quality, and those that do yield similar values to studies of injury-related risks. Given this result, combining the findings of these few studies with the findings of the more robust literature on injury-related risks appears to provide a reasonable range of estimates for application in regulatory analysis. Our review yields estimates ranging from about $4.2 million to $13.7 million with a mid-point of $9.0 million (2013 dollars). Although the studies we identify differ from those that underlie the values currently used by Federal agencies, the resulting estimates are remarkably similar, suggesting that there is substantial consensus emerging on the values applicable to the general US population. Copyright © 2015 John Wiley & Sons, Ltd.

Do preferences of drinker-drivers differ?

Why people engage in illegal activities is not well understood. Using data collected for this research from eight cities in four states, this study investigates alternative explanations as to why people drive while intoxicated (DWI). We find that preferences and subjective beliefs about arrest/incarceration of persons who drink and drive do differ systematically from others in terms of benefits and costs of drink and driving, and in their risk tolerance. While most findings imply that DWI is a deliberate choice, we do find that drinker drivers tend to be more impulsive and lack self-control in their drinking.

The pricing of breakthrough drugs: theory and policy implications

Pharmaceutical sales exceed $850 billion a year, of which 84% are accounted for by brand drugs. Drug prices are the focus of an ongoing heated debate. While some argue that pharmaceutical companies exploit monopolistic power granted by patent protection to set prices that are “too high”, others claim that these prices are necessary to motivate the high R&D investments required in the pharmaceutical industry. This paper employs a recently documented utility function of health and wealth to derive the theoretically optimal pricing of monopolistic breakthrough drugs. This model provides a framework for a quantitative discussion of drug price regulation. We show that mild price regulation can substantially increase consumer surplus and the number of patients who purchase the drug, while having only a marginal effect on the revenues of the pharmaceutical company.

Market failure in the pharmaceutical industry and how it can be overcome: the CureShare mechanism

Allowing patients to take part in the initial investment for the development of cures for their illnesses can, under certain conditions, lead to the development of drugs that would have otherwise not been developed and to a dramatic welfare increase. We theoretically analyze these conditions. The suggested patient investment mechanism, which we call CureShare, does not involve any philanthropy or government subsidies. It is simply a way to overcome market failure. Based on empirical data, we estimate that applying this mechanism may save thousands of lives annually and may dramatically improve the quality of many others.

Managing genetic tests, surveillance, and preventive medicine under a public health insurance system

There is a prospect in the medium to long term future of substantial advancements in the understanding of the relationship between disease and genetics. We consider the implications of increased information from genetic tests about predisposition to diseases from the perspective of managing health care provision under a public health insurance scheme. In particular, we consider how such information may potentially improve the targeting of medical surveillance (or prevention) activities to improve the chances of early detection of disease onset. We show that the moral hazard implications inherent in surveillance and prevention decisions that are chosen to be privately rather than socially optimal may be exacerbated by increased information about person-specific predisposition to disease.

Disability and marginal utility of income: evidence from hypothetical choices

It is often assumed that disability reduces the marginal utility of income. In this article, individuals' marginal utility of income in two states-(i) paralyzed in both legs from birth and (ii) not mobility impaired at all-is measured through hypothetical choices between imagined lotteries behind a so-called veil of ignorance. The outcomes of the lotteries include both income and disability status. It is found that most people have higher marginal utility when paralyzed than when not mobility impaired at all. The two marginal utilities are evaluated at the same levels of income. Having personal experience of mobility impairment and supporting the Left Party, the Social Democratic Party, the Green Party, or the Liberal Party are associated with having a higher marginal utility when paralyzed. The results suggest that more than full insurance of income losses connected to being disabled is optimal. The results further suggest that, given a utilitarian social welfare function, resources should be transferred to rather than from disabled people. Finally, if the transfers are not large enough to smooth out the marginal utilities of the disabled and the nondisabled, distributional weights based on disability status should be used in cost-benefit analysis.

Long-term health investment when people underestimate their adaptation to old age-related health problems

This paper explores in a two-period model the economic implications of people's tendency to underestimate their ability to adapt to age-related health problems. We model this misperception by assuming that the individual underestimates his future subjective health. Under standard assumptions, we show that, when people allocate their resources during their youth between present consumption, savings, and health investment, they invest more in health as long as the magnitude of the cross-marginal utility of health and consumption is not too negative.

The utility of health and wealth

Tradeoffs between health and wealth are among the most important decisions individuals make, and are central to social and economic policy. Yet, only a few studies have investigated the utility of health and wealth empirically. This paper investigates this utility function both theoretically and empirically. We conduct detailed personal interviews with 180 cancer patients, and also obtain questionnaires from 132 diabetes patients. We find strong support for the utility function U(h, w)=h·log(w), where h denotes health and w denotes wealth.

An experimental test of the concentration index

The concentration index is widely used to measure income-related inequality in health. No insight exists, however, whether the concentration index connects with people's preferences about distributions of income and health and whether a reduction in the concentration index reflects an increase in social welfare. We explored this question by testing the central assumption underlying the concentration index and found that it was systematically violated. We also tested the validity of alternative health inequality measures that have been proposed in the literature. Our data showed that decreases in the spread of income and health were considered socially desirable, but decreases in the correlation between income and health not necessarily. Support for a condition implying that the inequality in the distribution of income and in the distribution of health can be considered separately was mixed.

Endogenous patient responses and the consistency principle in cost-effectiveness analysis

In addition to incurring direct treatment costs and generating direct health benefits that improve longevity and/or health-related quality of life, medical interventions often have further or "unrelated" financial and health impacts, raising the issue of what costs and effects should be included in calculating the cost-effectiveness ratio of an intervention. The "consistency principle" in medical cost-effectiveness analysis (CEA) requires that one include both the cost and the utility benefit of a change (in medical expenditures, consumption, or leisure) caused by an intervention or neither of them. By distinguishing between exogenous changes directly brought about by an intervention and endogenous patient responses to the exogenous changes, and within a lifetime utility maximization framework, this article addresses 2 questions related to the consistency principle: 1) how to choose among alternative internally consistent exclusion/inclusion rules, and 2) what to do with survival consumption costs and earnings. It finds that, for an endogenous change, excluding or including both the cost and the utility benefit of the change does not alter cost-effectiveness results. Further, in agreement with the consistency principle, welfare maximization implies that consumption costs and earnings during the extended life directly caused by an intervention should be included in CEA.

Cost effectiveness in low- and middle-income countries: a review of the debates surrounding decision rules

Cost-effectiveness analysis (CEA) is increasingly important in public health decision making, including in low- and middle-income countries. The decision makers' valuation of a unit of health gain, or ceiling ratio (lambda), is important in CEA as the relative value against which acceptability is defined, although values are usually chosen arbitrarily in practice. Reference case estimates for lambda are useful to promote consistency, facilitate new developments in decision analysis, compare estimates against benefit-cost ratios from other economic sectors, and explicitly inform decisions about equity in global health budgets. The aim of this article is to discuss values for lambda used in practice, including derivation based on affordability expectations (such as $US150 per disability-adjusted life-year [DALY]), some multiple of gross national income or gross domestic product, and preference-elicitation methods, and explore the implications associated with each approach. The background to the debate is introduced, the theoretical bases of current values are reviewed, and examples are given of their application in practice. Advantages and disadvantages of each method for defining lambda are outlined, followed by an exploration of methodological and policy implications.

Willingness to pay for road safety and estimates of the risk of death: evidence from a Swedish contingent valuation study

We examine how WTP for a reduction in road-mortality risk varies with different individual characteristics and how subjective mortality-risk estimates differ from objective (statistical) mortality-risk values. Using data from a Swedish contingent valuation study, we find some support that WTP declines with age and background risk, but we find no support that WTP varies with health status. Further, we find that respondents underassess their own mortality risks, both road- and total-mortality risks, compared to the objective risk measures for Sweden at the time of the survey.

Consumption and Health

Many studies show that individuals do not perfectly smooth consumption at older ages. We argue that an important explanation is that health status declines with age, making consumption at older ages less desirable. We incorporate health status into a standard incomplete markets life-cycle model, by allowing the marginal utility of consumption to increase with health status. Life-cycle income, mortality risk and health status are exogenous in the model and calibrated on Swedish data. Life-cycle consumption is endogenous and matches well Swedish Consumer Expenditure Survey data; consumption expenditure increase with age until about 60 years, and then falls with about 25% to 80 years. An alternative model with mortality risk, but without health status, fails in capturing the fall in consumption with age seen in the data.

Willingness to pay for reductions in health risks when probabilities are distorted

We study the willingness to pay for reductions in health risks when people do not evaluate probabilities linearly, as is commonly assumed in elicitations of willingness to pay, but weight probabilities, as is commonly observed in empirical studies of decision under risk. We show that for the levels of baseline risk typically considered, probability weighting strongly affects willingness to pay estimates and may lead to unstable monetary valuations of health.

The economic value of informal care: a study of informal caregivers' and patients' willingness to pay and willingness to accept for informal care

We provide a new test of the feasibility of using contingent valuation to value informal care. We start with a theoretical model of informal caregiving and derive that willingness to pay depends positively on wealth and negatively on own health, whereas the effect of other's health is sign-ambiguous. These predictions are tested in two new data sets on patients' and caregivers' willingness to pay (WTP) and willingness to accept (WTA) for informal care. The data are generally consistent with the theoretical predictions: wealth generally has a positive impact and own health a negative impact. Other's health has a mixed effect. We find only small differences between WTP and WTA. Our findings suggest that contingent valuation may be a useful technique to value informal care in economic evaluations of health care.

The impact of considering adaptation in health state valuation

Patients with chronic health conditions often rate their quality of life (QoL) significantly higher than non-patients. One explanation for this discrepancy is that non-patients focus on the negative aspects of the onset of a condition, especially the early difficulties people face when they first experience a debilitating condition, without considering that patients can adapt to it over time. To test this hypothesis, we had 359 people perform person tradeoff (PTO) elicitations in an online survey, varying whether the treatment programs under consideration saved the lives of patients (a) with pre-existing paraplegia; or (b) who would experience new onset of paraplegia. Half of each group completed an "adaptation exercise" which encouraged them to consider their own ability to emotionally adapt to negative events in general and specifically to having paraplegia. The adaptation manipulation increased the value participants placed on pre-existing paraplegia (p=0.03) and on new onset paraplegia (p=0.05), relative to saving healthy lives. Moreover, the adaptation exercise dramatically reduced the differences between evaluations of pre-existing and new onset paraplegia to values within 2% of each other. Our findings suggest that asking non-patients to do an adaptation exercise before giving QoL ratings may help close the gap in ratings between patients and citizen non-patients.

Willingness to pay for prevention and treatment of lymphatic filariasis in Leogane, Haiti

Background

Lymphatic filariasis (LF) affects more than 120 million people worldwide. Efforts to eliminate this disease require sustained community participation. This study explores community valuation of LF elimination efforts by estimating household and community willingness to pay (WTP) for the prevention of transmission and treatment of filarial lymphedema in the community of Leogane, Haiti.

Methods

A contingent valuation survey was used to assess individual WTP for specific prevention and treatment interventions. A 2-dimensional Monte Carlo simulation was developed to estimate confidence limits in mean WTP and to generate a distribution of WTP for the community, accounting for uncertainty in regression coefficients and variability within the population.

Results

Mean WTP was estimated to be $5.57/month/household (95% CL: $4.76, $6.72) to prevent disease transmission, and $491/yr (95% CL: $377, $662) for treatment of lymphedema for one person. Based on the estimated distributions, 7% and 39% of households were not willing to pay for prevention and treatment, respectively.

Conclusions

These results suggest that the majority of the community places a positive value on both prevention and treatment of LF. Mean WTP provides a useful monetary estimate of overall societal benefit of LF prevention and treatment programs. However, for interventions which require broad and sustained community participation, the lower end of the distribution of WTP has additional implications. Cost recovery policies may result in inadequate participation and longer program duration.

L’évaluation médico-économique dans la sclérose en plaques

In multiple sclerosis, evaluation of quality of life is important because the patients are usually confronted with a decrease in physical, cognitive and social functioning. Apart from the personal suffering, the financial consequences for these patients and their family and the economic burden for society are enormous. Measurement of health related quality of life is important for the understanding of disease burden and the impact of specific MS treatments. Rising costs associated with new treatments and spending limits have prompted a search for gratter efficiency. Although health economics research can suggest ways to maximize health benefits within fixed budgets it is currently underused in MS. The purpose of this review of the literature is to explain some of the basic principles underlying both quality of life and economic evaluations, and analyse their contribution to understanding and managing patients with MS. Neurologists should not underestimate how dramatic their contributions can be to this maturing field that will influence the future of MS patients care.

Whose quality of life? A commentary exploring discrepancies between health state evaluations of patients and the general public

There is often a discrepancy between quality of life estimates from patients and the general public. These discrepancies are of concern to the disability community, who worry that the public does not understand how valuable life can be for people with disabilities; policy planners, who must decide whose quality of life estimates to use in economic analysis; and practitioners and patients facing difficult medical decisions, who may have to worry that people have difficulty imagining unfamiliar health states. We outline several factors that may contribute to these discrepancies. Discrepancies might occur because patients and the public interpret health state descriptions differently--for example, making different assumptions about the recency of onset of the health state, or about the presence of comorbidities. Discrepancies might also arise if patients adapt to illness and the public does not predict this adaptation; because of response shift in how people use quality of life scales; because of a focusing illusion whereby people forget to consider obvious aspects of unfamiliar health states; because of contrast effects, whereby negative life events make people less bothered by less severe negative life events; and because of different vantage points, with patients viewing their illness in terms of the benefits that would result from regaining health, while the public views the illness in terms of the costs associated with losing good health. Decisions about whose values to measure for the purposes of economic analyses, and how to measure discrepancies, should take these potential contributing factors into account.

QALYs versus WTP

Quality adjusted life years (QALYs) and willingness to pay (WTP) are alternative measures of the value of reductions in health risk that are often used in evaluating environmental, health, and safety practices. Although both methods are based on individual preferences, the underlying assumptions differ. The different bases yield systematically different conclusions about the relative value of reducing health and mortality risks to individuals that differ in age, preexisting health conditions, income, and other factors. The choice of which method to use depends on judgments about what constraints should be placed on individual preferences and what factors should be considered in aggregating preferences across people.

Is it really possible to build a bridge between cost-benefit analysis and cost-effectiveness analysis?

Cost-benefit analysis (CBA) is a recognised as the economic evaluation technique that accords most with the underlying principles of standard welfare economic theory. However, due to problems associated with the technique, economists evaluating resources allocation decisions in health care have most often used cost-effective analysis (CEA), in which health benefits are expressed in non-monetary units. As a result, attempts have been made to build a welfare economic bridge between cost-benefit analysis (CBA) and cost-effectiveness analysis (CEA). In this paper, we develops these attempts and finds that, while assumptions can be made to facilitate a constant willingness-to-pay per unit of health outcome, these restrictions are highly unrealistic. We develop an impossibility theorem that shows it is not possible to link CBA and CEA if: (i) the axioms of expected utility theory hold; (ii) the quality-adjusted life-year (QALY) model is valid in a welfare economic sense; and (iii) illness affects the ability to enjoy consumption. We conclude that, within a welfare economic framework, it would be unwise to rely on a link between CBA and CEA in economic evaluations.

Comparing the cost of epilepsy across eight European countries

To observe the degree to which prices for medical services and anti-epileptic drugs (AEDs) vary between eight European Union (EU) countries, to identify the factors that are likely to contribute to these variations and to consider the validity of international cost-of-illness comparisons. Cost-of-illness study methodology has been used to estimate the national cost of epilepsy in several developed countries. The validity of comparing these studies is unknown. Eight EU member countries were selected. Charges and prices were obtained for important aspects of medical care of patients with epilepsy including AEDs. The perspective taken was that of the major health care payer within each country. Prices were validated by a local panel of doctors expert in treating epilepsy. Prices for similar services were compared between countries. Charges and prices levied to health service payer vary widely between the eight countries considered. The cheapest and most expensive medical services vary by as much as 24 times, whereas the price of AED varies up to 4.4 times. These wide variations suggest that prices do not reflect the true cost of providing these important aspects of epilepsy treatment. International comparisons between national cost-of-illness estimates relying on such prices should be interpreted with caution.

Willingness to pay as a measure of the benefits of mental health care

BACKGROUND: Decision-makers would benefit from being able to plan and evaluate mental health care interventions or programmes on the basis of costs and consequences that are measured in the same unit of measurement (money being the most convenient). Monetized quantification of the consequences of alternative interventions could be subsequently incorporated into cost-benefit allocation decisions. AIM: This paper provides an overview of the policy and research context within which willingness-to-pay survey techniques are located, together with a review of the main approaches used to date. We also highlight key issues in the application of these techniques and indicate areas of mental health research and policy that could benefit from their introduction. METHOD: Willingness-to-pay survey techniques are reviewed, and issues concerning their validity and application in the context of cost-benefit analyses of mental health policies are discussed. DISCUSSION: Different survey methods are available for generating willingness-to-pay data, the most common being the contingent valuation approach. An assessment of the validity of data generated by these alternative techniques is vital in order to ensure that they are consistent with the notion of economic preferences and values. IMPLICATIONS: The generation of valid and meaningful data on the monetized value of mental health outcomes would provide decision-makers with an improved evidence-based framework for resource allocation.