Room: Phillips 231
Time: Tue 13:15 PM-14:45 PM

Smoking Status and WTP for Private and Public Health Risk Reductions

Chair: Ana Bobinac

Session Description

This session features three examples of joint work by established senior researchers andpromising younger talent in the growing field of demand-side research in environmental healtheconomics. All three of these papers feature disaggregation in benefits estimates for policies or programs to reduce morbidity and/or mortality risks. Willingness to pay (WTP) can be expected to vary systematically with the attributes of the health risk and the characteristics of the individual, and the traditional strategy of first aggregating the physical benefits of a policy over the population and then multiplying by a single “value of a statistical life” (VSL) obscures important information. Heterogeneity in both the benefits and the costs of a program or policy is also important because individual net benefits must be assessed before it is possible to say anything about the likely distributional consequences of some measure.

The first study in this session uses a stated-preference general population survey of adults aged25 to 93 to construct a utility-theoretic model of preferences over reductions in health riskswhich are characterized as probabilistic future illness profiles (pre-illness, sick-years, recovered/remission years, and lost life-years). Each profile is randomly assigned an illness label, making it possible to distinguish the effect of the illness label from the actual pattern ofhealth states, as well as any unobserved individual heterogeneity. Subjects consider options to reduce their risks of specific illness profiles at given costs. The estimated model permits simulation of WTP for reduced risks of arbitrarily specified illness profiles, including end-of-life illnesses. WTP for an additional life-year depends upon the duration of any prior morbidity.Individual demands for reduced risks of future lung cancer and respiratory disease are also highly sensitive to the individual’s current smoking status.

The second study looks specifically at a sample of smokers aged 50-64. A computerizedconjoint choice experiment is designed to allow the authors to devise a utility-theoretic choicemodel that permits them to infer smokers’ willingness to pay for end-of-life mortality risk reductions that could be achieved without quitting smoking. The goal is to identify WTP for longevity increases between one and four years, when these life extensions would beexperienced under specified restrictions on the activities of daily living. The authors find that netbenefits of interventions that lead to modest increases in longevity are likely to be positive only ifthe interventions also yield high quality of life.

The third study broadens the scope of the session to consider individuals’ WTP for publiclyfunded treatment policies to increase recoveries and reduce deaths from different types of illnesses. Heterogeneity in preferences by type of policy and subject characteristics is again thefocus, and the different preferences of smokers and non-smokers are an incidental feature ofthis analysis as well. Potential self-interest clearly dominates preferences for public healthprograms. Diminishing marginal WTP for additional recoveries and avoided deaths is identified.In a striking corroboration of recent debates, this research identifies systematically varyingbiases either for or against tax-funded treatment programs, regardless of their scope or efficacy.

Key Terms None

Session Organizer: Trudy Ann Cameron (University of Oregon)

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Presentations

1. Willingness to Pay for Health Risk Reductions: Differences by Type of Illness

   Presenter: Erica Johnson (Gonzaga University)

   Discussant: Derek Brown

2. Lives worth living: Older smokers’ stated preferences for longevity

   Presenter: Juan Marcos González (RTI Health Solutions)

   Discussant: Allen Goodman

3. Willingness to pay for public health treatment programs

   Presenter: Trudy Ann Cameron (University of Oregon)

   Discussant: Donald Kenkel (Cornell University)