Room: Phillips 219
Time: Wed 12:00 PM-13:30 PM

Economic Valuation of Mortality Risk Reduction: Stated Preference Estimates from the United States and Canada

Chair: Adam Skelton

Session Description

Comparisons across the U.S. and Canada have received considerable attention in the recent health-care debate in the U.S., and the supply side for health care has been at the center of these discussions. In other contexts, however, differences in the demand for health risk reductions across the two countries can be relevant. Included in this session are three papers about willingness to pay (WTP) for health risk reductions. The common theme is either (1) an active comparison of WTP for health risk reductions across Canada and the U.S., or (2) WTP estimates that have been derived only for Canada but which may be relevant to the U.S.—provided that preferences are similar across the two countries.

Cost-effectiveness measures such as dollars per quality-adjusted life year (QALY) can be appropriate for comparisons of alternative allocations of financial resources across different treatments for different types of illnesses. However, environmental health economists must struggle with broader questions raised by the need to allocate resources across both human health objectives and other competing objectives such as the protection of ecosystems. In benefit-cost analysis of environmental regulations, there is great demand for WTP-based estimates of value that are conformable across multiple policy objectives. All papers in this session reflect this “environmental health” perspective on valuation.

Two papers in this session rely upon consumer choices elicited via stated preference methods. These papers contribute to a growing body of knowledge about similarities and differences in WTP for health risk reductions in the U.S. and Canada. Another paper uses consumer choices in a revealed preference context to address WTP to reduce a very salient public health threat inCanada—the safety of municipal water supplies—that is likely to be a looming concern for infrastructure managers all over the U.S. as well. If estimated demands for health risk reductions are comparable across the two countries, duplicative research might be avoided.

All three papers in this session rely upon consumer choice data gathered via large general population surveys, and all three employ best-practices methods that reflect what is now several decades of evolution in standards for these demand-elicitation methodologies. Each study uses utility-theoretic choice models to estimate preference parameters from which WTP estimates can be inferred. Extensive controls for respondent heterogeneity (either systematic or latent) are employed to facilitate transferability, to different policy contexts, of the fitted models which produce tailored valuation estimates.

The two U.S./Canada comparison papers employ somewhat different approaches to the same problem. They collect different types of choice information, use different estimating specifications, and come to somewhat different conclusions. A careful comparison of these two studies is necessary to understand what subsequent research may be helpful and where the “weight of the evidence” may be leading us. The answer is important, for example, to the valuation of reductions in health risks stemming from drinking-water quality and whether U.S. policy-makers responsible for decisions about the safety of municipal water supplies should pay attention to the results for Canada also described in this session.

Key Terms None

Session Organizer: Trudy Ann Cameron (University of Oregon)

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Presentations

1. Willingness to Pay Estimates for Mortality Risk Reduction: Stated Preference Estimates from the United States and Canada

   Presenter: Lauraine Chestnut (Stratus Consulting Inc.)

   Discussant: Derek Brown

2. At Odds with Water: Perceived Health Risks and Water in Canada

   Presenter: Diane Dupont (Brock University)

   Discussant: Erica Johnson

3. Demand for Health Risk Reductions: A Cross-National Comparison Between the United States and Canada

   Presenter: Trudy Ann Cameron (University of Oregon)

   Discussant: Glenn Blomquist (University of Kentucky)