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The subjective costs of health losses due to chronic diseases. An alternative model for monetary appraisal

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  • Ada Ferrer-i-Carbonell

    (Faculty of Economics and Econometrics and SEO Amsterdam Economics, University of Amsterdam, The Netherlands)

  • Bernard M.S. van Praag

    (Faculty of Economics and Econometrics, University of Amsterdam, The Netherlands)

Abstract

This paper proposes a method to evaluate health losses or gains by looking at the impact on well-being of a change in health status. The paper presents estimates of the equivalent income change that would be necessary to change general satisfaction with life to the same extent as a change in health satisfaction would do. In other words, the income equivalent of health satisfaction changes is estimated. Next, this health satisfaction changes are linked to specific diseases in order to estimate the income equivalent for these diseases. This method uses answers to well-being and health satisfaction questions as posed in a large German data set, distinguishing between workers and non-workers and between East and West Germans. It is found, for instance, that for West-German workers hearing impediments are on average equivalent to an income reduction of about 20%, and that heart or blood difficulties are for the same group equivalent to a 47% income reduction. Copyright © 2002 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.696
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 11 (2002)
Issue (Month): 8 ()
Pages: 709-722

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Handle: RePEc:wly:hlthec:v:11:y:2002:i:8:p:709-722

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. Oswald, Andrew, 1997. "Happiness and Economic Performance," The Warwick Economics Research Paper Series (TWERPS) 478, University of Warwick, Department of Economics.
  2. Bernard M.S. van Praag & P. Frijters & A. Ferrer-i-Carbonell, 2000. "A Structural Model of Well-being: with an application to German Data," Tinbergen Institute Discussion Papers 00-053/3, Tinbergen Institute.
  3. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492 National Bureau of Economic Research, Inc.
  4. Jennifer Hunt, 2000. "Why Do People Still Live in East Germany?," NBER Working Papers 7564, National Bureau of Economic Research, Inc.
  5. G. Ardine De Wit & Jan J.V. Busschbach & Frank Th. De Charro, 2000. "Sensitivity and perspective in the valuation of health status: whose values count?," Health Economics, John Wiley & Sons, Ltd., vol. 9(2), pages 109-126.
  6. Terza, Joseph V., 1987. "Estimating linear models with ordinal qualitative regressors," Journal of Econometrics, Elsevier, vol. 34(3), pages 275-291, March.
  7. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
  8. Jennifer Hunt, 1999. "Determinants of Non-employment and Unemployment Durations in East Germany," NBER Working Papers 7128, National Bureau of Economic Research, Inc.
  9. Torrance, George W., 1986. "Measurement of health state utilities for economic appraisal : A review," Journal of Health Economics, Elsevier, vol. 5(1), pages 1-30, March.
  10. Bernard M.S. van Praag & P. Frijters & A. Ferrer-i-Carbonell, 2000. "A Structural Model of Well-being: with an application to German Data," Tinbergen Institute Discussion Papers 00-053/3, Tinbergen Institute.
  11. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-59, May.
  12. Hurley, Jeremiah, 2000. "An overview of the normative economics of the health sector," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 2, pages 55-118 Elsevier.
  13. Samuelson, Paul A, 1974. "Complementarity-An Essay on the 40th Anniversary of the Hicks-Allen Revolution in Demand Theory," Journal of Economic Literature, American Economic Association, vol. 12(4), pages 1255-89, December.
  14. James P. Smith, 1999. "Healthy Bodies and Thick Wallets: The Dual Relation between Health and Economic Status," Journal of Economic Perspectives, American Economic Association, vol. 13(2), pages 145-166, Spring.
  15. Bruno S. Frey & Alois Stutzer, 1999. "Measuring Preferences by Subjective Well-Being," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 155(4), pages 755-778, December.
  16. Groot, Wim, 2000. "Adaptation and scale of reference bias in self-assessments of quality of life," Journal of Health Economics, Elsevier, vol. 19(3), pages 403-420, May.
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