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An Empirical Note on Willingness to Pay and Starting-point Bias

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  • Nils-Olov StÃ¥lhammar

Abstract

One of the most serious sources of potential bias when using the contingent valuation (CV) method to assess willingness to pay (WTP) is implied-value cues, i.e., different types of starting-point bias. The possible existence of starting-point bias is serious, since it may be interpreted to mean that the responders' preferences are very unstable. While the empirical evidence from environmental economics on starting-point bias is mixed, an earlier study in health economics did not find any clear evidence of starting- point bias. However, in the study presented here, a clear presence of starting-point bias was found. In a Swedish survey of how and when patients take antisecretory drugs, the patients were asked about their willingness to pay for a medication that can be taken in relation to meals compared with one that must be taken at least one hour before meals and has the additional disadvantage that it interacts with contraceptive pills. Among the 105 respondents, 82 were willing to pay a sum in addition to the normal patient fee in order to obtain the drug that could be taken during meals. The 82 patients thereafter participated in a bidding game that could start at a low bid (SEK 20) or a high bid (SEK 1,000). On average, the patients were willing to pay an addi tional SEK 138 (1 SEK = 0.13 U.S. dollar, April 1995) to obtain the superior drug. However, the average WTP among the 42 patients who started at the low bid was 70 SEK, which should be compared to an average of 289 SEK among the 40 patients who initially were offered the high bid. Key words: contingent valuation; willingness to pay; starting-point bias. (Med Decis Making 1996;16:242-247)

Suggested Citation

  • Nils-Olov StÃ¥lhammar, 1996. "An Empirical Note on Willingness to Pay and Starting-point Bias," Medical Decision Making, , vol. 16(3), pages 242-247, August.
    • Handle: RePEc:sae:medema:v:16:y:1996:i:3:p:242-247
    DOI: 10.1177/0272989X9601600308
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    4. Magnus Johannesson, 1993. "The contingent valuation method—appraising the appraisers," Health Economics, John Wiley & Sons, Ltd., vol. 2(4), pages 357-359, December.
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