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Money for health: the equivalent variation of cardiovascular diseases

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Author Info

  • Wim Groot

    (Department of Economics, University of Amsterdam, The Netherlands)

  • Henri�tte Maassen van den Brink

    (Department of Economics, University of Amsterdam, The Netherlands)

  • Erik Plug

    (Department of Economics, University of Amsterdam, The Netherlands)

Abstract

This paper introduces a new method to calculate the extent to which individuals are willing to trade money for improvements in their health status. An individual welfare function of income (WFI) is applied to calculate the equivalent income variation of health impairments. We believe that this approach avoids various drawbacks of alternative willingness-to-pay methods. The WFI is used to calculate the equivalent variation of cardiovascular diseases. It is found that for a 25 year old male the equivalent variation of a heart disease ranges from €114 000 to €380 000 depending on the welfare level. This is about €10 000 -€30 000 for an additional life year. The equivalent variation declines with age and is about the same for men and women. The estimates further vary by discount rate chosen. The estimates of the equivalent variation are generally higher than the money spent on most heart-related medical interventions per QALY. The cost-benefit analysis shows that for most interventions the value of the health benefits exceeds the costs. Heart transplants seem to be too costly and only beneficial if patients are young. Copyright © 2004 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.867
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Bibliographic Info

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

Volume (Year): 13 (2004)
Issue (Month): 9 ()
Pages: 859-872

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Handle: RePEc:wly:hlthec:v:13:y:2004:i:9:p:859-872

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

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References

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Citations

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Cited by:
  1. Ricardo Pagán-Rodríguez, 2010. "Onset of disability and life satisfaction: evidence from the German Socio-Economic Panel," The European Journal of Health Economics, Springer, vol. 11(5), pages 471-485, October.
  2. Powdthavee, Nattavudh, 2009. "Ill-health as a household norm: Evidence from other people's health problems," Social Science & Medicine, Elsevier, vol. 68(2), pages 251-259, January.
  3. Oswald, Andrew J. & Powdthavee, Nattavudh, 2006. "Does Happiness Adapt? A Longitudinal Study of Disability with Implications for Economists and Judges," IZA Discussion Papers 2208, Institute for the Study of Labor (IZA).
  4. Frijters, Paul & Johnston, David W. & Shields, Michael A., 2008. "Happiness Dynamics with Quarterly Life Event Data," IZA Discussion Papers 3604, Institute for the Study of Labor (IZA).
  5. Nils Braakmann, 2009. "Other-Regarding Preferences, Spousal Disability and Happiness: Evidence from German Couples," SOEPpapers on Multidisciplinary Panel Data Research 194, DIW Berlin, The German Socio-Economic Panel (SOEP).
  6. Pavlova, Milena & Hendrix, Marijke & Nouwens, Elvira & Nijhuis, Jan & van Merode, Godefridus, 2009. "The choice of obstetric care by low-risk pregnant women in the Netherlands: Implications for policy and management," Health Policy, Elsevier, vol. 93(1), pages 27-34, November.
  7. FLEURBAEY, Marc & SCHOKKAERT, Erik, 2011. "Equity in health and health care," CORE Discussion Papers 2011026, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  8. Powdthavee, Nattavudh & van den Berg, Bernard, 2011. "Putting different price tags on the same health condition: Re-evaluating the well-being valuation approach," Journal of Health Economics, Elsevier, vol. 30(5), pages 1032-1043.
  9. Kapteyn, Arie & Kleinjans, Kristin J. & van Soest, Arthur, 2009. "Intertemporal consumption with directly measured welfare functions and subjective expectations," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 425-437, October.
  10. Ricardo Pagán-Rodríguez, 2012. "Longitudinal Analysis of the Domains of Satisfaction Before and After Disability: Evidence from the German Socio-Economic Panel," Social Indicators Research, Springer, vol. 108(3), pages 365-385, September.
  11. Ada Ferrer-i-Carbonell, 2013. "Happiness economics," SERIEs, Spanish Economic Association, vol. 4(1), pages 35-60, March.
  12. H. Eme Ichoku & William Fonta & Michael Thiede, 2011. "Socioeconomic gradients in self-rated health: a developing country case study of Enugu State, Nigeria," Economic Change and Restructuring, Springer, vol. 44(3), pages 179-202, August.
  13. Oswald, Andrew J. & Powdthavee, Nattavudh, 2007. "Death, Happiness, and the Calculation of Compensatory Damages," The Warwick Economics Research Paper Series (TWERPS) 827, University of Warwick, Department of Economics.
  14. Wim Groot & Henri�tte Maassen van den Brink, 2006. "The compensating income variation of cardiovascular disease," Health Economics, John Wiley & Sons, Ltd., vol. 15(10), pages 1143-1148.

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