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Assigning Values To Life: Comparing Methods For Valuing Health Risks

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Author Info
Kuchler, Fred
Golan, Elise
Abstract

We examine five approaches economists and health policy analysts have developed for evaluating policy affecting health a safety: cost-of-illness, willingness-to-pay, cost-effectiveness analysis, risk-risk analysis, and health-health analysis. We examine the theoretical basis and empirical application of each approach and investigate the influences that assumptions embedded in each approach have on policy guidance. We reach four principal conclusions. First, the approaches are not interchangeable: they measure different things. Even estimates using the same approach are often not comparable because, in practice, there is little consistency in the application of any of the approaches. Second, the usefulness of each approach depends on the unit of account. The philosophical decision to eschew the monetization of health costs or benefits constrains the ability of the approach to rank policy options and to gauge the social desirability of policy. Third, all of the approaches except risk-risk analysis and one variation of cost-effectiveness analysis incorporate the effects of income and circumstance. As a result, policy guidance could be influenced by the distribution of income. Fourth, the theory and practice of willingness-to-pay estimation are in opposition. While it is now common practice for regulatory agencies to adopt the willingness-to-pay approach for estimating health and safety benefits, they do so by assuming away the importance of individual preferences. We build on these four conclusions to suggest the appropriate use of each approach.

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Paper provided by United States Department of Agriculture, Economic Research Service in its series Agricultural Economics Reports with number 34037.

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Date of creation: 1999
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Handle: RePEc:ags:uerser:34037

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Keywords: Health Economics and Policy;

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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.:
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  1. Ragona, Maddalena & Mazzocchi, Mario, 2008. "Impact Evaluation of Food Safety Regulations: A Review of Quantitative Methods," 110th Seminar, February 18-22, 2008, Innsbruck-Igls, Austria 49887, European Association of Agricultural Economists. [Downloadable!]
  2. Crutchfield, Steve & Kuchler, Fred & Variyam, Jayachandran N., 2001. "Valuing The Health Benefits Of Nutrition Labeling: A Case Study For Meat And Poultry Products," 2001 Annual meeting, August 5-8, Chicago, IL 20559, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
  3. Ragona, M. & Mazzocchi, M., 2008. "Measuring the Impacts of Food Safety Regulations: A Methodological Review," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43864, European Association of Agricultural Economists. [Downloadable!]
  4. Nicholas Graves & Diana Weinhold & Jennifer A. Roberts, 2005. "Correcting for bias when estimating the cost of hospital-acquired infection: an analysis of lower respiratory tract infections in non-surgical patients," Health Economics, John Wiley & Sons, Ltd., vol. 14(7), pages 755-761. [Downloadable!]
  5. Rodriguez, Elsa & Lacaze, Victoria & Lupin, Beatriz, 2007. "Willingness to pay for organic food in Argentina: Evidence from a consumer survey," 105th Seminar, March 8-10, 2007, Bologna, Italy 7873, European Association of Agricultural Economists. [Downloadable!]
  6. Luis A. Cifuentes & Alan J. Krupnick & Raúl O'Ryan & Michael A. Toman, 2005. "Urban Air Quality and Human Health in Latin America and the Caribbean," Documentos de Trabajo 212, Centro de Economía Aplicada, Universidad de Chile. [Downloadable!]
  7. Key, Ross & Burton, Robert & Featherstone, Allen, 2006. "Agricultural Health and Safety: A Research Agenda for Agricultural Economists," 2006 Annual Meeting, February 5-8, 2006, Orlando, Florida 35461, Southern Agricultural Economics Association. [Downloadable!]
  8. Erwin Blackstone & Andrew Buck & Simon Hakim, 2007. "The economics of emergency response," Policy Sciences, Springer, vol. 40(4), pages 313-334, December. [Downloadable!] (restricted)
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