Willingness to pay for health risk reductions: The importance of scenario adjustment, household structure and type of disease
Johnson, Erica H.
Environmental regulations are increasingly subjected to benefit-cost analysis as an aid to decision-making in policy. Economic benefits are most appropriately measured by the tradeoffs of other goods and services that people are willing to make to obtain reductions in risks to their lives and health. The measure of willingness to pay ( WTP ) allows for this comparison. These benefits from risk reductions are likely to vary systematically by characteristics of the individual, including the number and ages of children present in the household, and by the type of health threat under consideration. In chapter one of this dissertation, I write a brief introduction. In the second chapter, I examine an important methodological issue--the extent of "scenario adjustment" in a Stated Preference ( SP ) conjoint choice experiment in the context of a household survey concerning health risk reductions. Scenario adjustment occurs when respondents assume that a substantive alternative in a choice set, in their own particular case, will be different than the survey instrument describes. This is a potential source of bias in SP research similar to scenario rejection, but harder to detect. I analyze the impact of scenario adjustment on WTP and suggest a possible correction. In the third chapter, I address the empirical question of patterns in adults' WTP for health risk reductions. I find that demand is influenced by the presence of children, the numbers of children in different age brackets currently in the household, and, for health risks with latency periods, by the prospect of children still being present when a parent's ill health begins or death occurs. In chapter four, I find systematic differences in WTP for health risk reductions across different types of major health threats, such as Alzheimer's disease versus heart attacks. I also look for evidence of a cancer premium due to the dread factor associated with the prospect of cancer. The health threats considered include chronic heart disease, sudden heart attacks, five types of cancers, respiratory disease, stroke, diabetes, Alzheimer's disease and traffic accidents. In chapter five, I conclude. This dissertation includes previously unpublished co-authored material.