This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Deriving welfare measures from discrete choice experiments: inconsistency between current methods and random utility and welfare theory

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Emily Lancsar (Business School (Economics) and Centre for Health Services Research, University of Newcastle upon Tyne, UK)
Elizabeth Savage (CHERE, University of Technology, Sydney, Australia)

Additional information is available for the following registered author(s):

Abstract

Discrete choice experiments (DCEs) are being used increasingly in health economics to elicit preferences for products and programs. The results of such experiments have been used to calculate measures of welfare or more specifically, respondents' 'willingness to pay' (WTP) for products and programs and their 'marginal willingness to pay' (MWTP) for the attributes that make up such products and programs. In this note we show that the methods currently used to derive measures of welfare from DCEs in the health economics literature are not consistent with random utility theory (RUT), or with microeconomic welfare theory more generally. The inconsistency with welfare theory is an important limitation on the use of such WTP estimates in cost-benefit analyses. We describe an alternative method of deriving measures of welfare (compensating variation) from DCEs that is consistent with RUT and is derived using welfare theory. We demonstrate its use in an empirical application to derive the WTP for asthma medication and compare it to the results elicited from the method currently used in the health economics literature. Copyright © 2004 John Wiley & Sons, Ltd.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://hdl.handle.net/10.1002/hec.870
File Format: text/html
File Function: Link to full text; subscription required
Download Restriction: no

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

Volume (Year): 13 (2004)
Issue (Month): 9 ()
Pages: 901-907
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:wly:hlthec:v:13:y:2004:i:9:p:901-907

Contact details of provider:
Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).

Related research
Keywords:

Other versions of this item:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Dorte Gyrd-Hansen & Jes Søgaard, 2001. "Analysing public preferences for cancer screening programmes," Health Economics, John Wiley & Sons, Ltd., vol. 10(7), pages 617-634. [Downloadable!]
  2. Scott, Anthony, 2001. "Eliciting GPs' preferences for pecuniary and non-pecuniary job characteristics," Journal of Health Economics, Elsevier, vol. 20(3), pages 329-347, May. [Downloadable!] (restricted)
  3. San Miguel, Fernando & Ryan, Mandy & McIntosh, Emma, 2000. "Applying Conjoint Analysis in Economic Evaluations: An Application to Menorrhagia," Applied Economics, Taylor and Francis Journals, vol. 32(7), pages 823-33, June. [Downloadable!] (restricted)
  4. Small, Kenneth A & Rosen, Harvey S, 1981. "Applied Welfare Economics with Discrete Choice Models," Econometrica, Econometric Society, vol. 49(1), pages 105-30, January. [Downloadable!] (restricted)
    Other versions:
  5. Adamowicz, Wiktor & Swait, Joffre & Boxall, Peter & Louviere, Jordan & Williams, Michael, 1997. "Perceptions versus Objective Measures of Environmental Quality in Combined Revealed and Stated Preference Models of Environmental Valuation," Journal of Environmental Economics and Management, Elsevier, vol. 32(1), pages 65-84, January. [Downloadable!] (restricted)
  6. Propper, Carol, 1990. "Contingent Valuation of Time Spent on NHS Waiting Lists," Economic Journal, Royal Economic Society, vol. 100(400), pages 193-99, Supplemen. [Downloadable!] (restricted)
  7. Adamowicz W. & Louviere J. & Williams M., 1994. "Combining Revealed and Stated Preference Methods for Valuing Environmental Amenities," Journal of Environmental Economics and Management, Elsevier, vol. 26(3), pages 271-292, May. [Downloadable!] (restricted)
  8. Ryan, Mandy & Wordsworth, Sarah, 2000. "Sensitivity of Willingness to Pay Estimates to the Level of Attributes in Discrete Choice Experiments," Scottish Journal of Political Economy, Scottish Economic Society, vol. 47(5), pages 504-24, November. [Downloadable!] (restricted)
  9. Trajtenberg, Manuel, 1989. "The Welfare Analysis of Product Innovations, with an Application to Computed Tomography Scanners," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 444-79, April. [Downloadable!] (restricted)
  10. Mandy Ryan & Jenny Hughes, 1997. "Using Conjoint Analysis to Assess Women's Preferences for Miscarriage Management," Health Economics, John Wiley & Sons, Ltd., vol. 6(3), pages 261-273.
  11. 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. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Richard Norman & Gisselle Gallego, 2008. "Equity weights for economic evaluation: An Australian Discrete Choice Experiment, CHERE Working Paper 2008/5," Working Papers 2008/5, CHERE, University of Technology, Sydney. [Downloadable!]
  2. Rinaldo Brau & Matteo Lippi Bruni, 2008. "Eliciting the demand for long-term care coverage: a discrete choice modelling analysis," Health Economics, John Wiley & Sons, Ltd., vol. 17(3), pages 411-433. [Downloadable!]
    Other versions:
Statistics
Access and download statistics

Did you know? Authors can create their own profile with links to their works on the RePEc Author Service.

This page was last updated on 2009-12-13.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.