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Limited dependent variables in willingness to pay studies: applications in health care

Author

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  • Cam Donaldson
  • Andrew Jones
  • Tracy Mapp
  • Jan Abel Olson

Abstract

The appropriate technique for econometric analysis of WTP (willingness to pay) data is an issue which has not been addressed in many studies of WTP for health and health care. This paper argues that, whether an open-ended question or a payment scale approach is adopted, the way in which WTP is recorded means that limited dependent variable models are more appropriate than standard regression analysis. Data from an open ended question on WTP for maternity care contain a large proportion of zeros and the evidence suggests that a two-part specification performs better than OLS or a standard Tobit model. If the payment scale method is adopted, our argument suggests that grouped data regression is an appropriate econometric technique. In practice, with data from a study in Northern Norway, the results from OLS and grouped data regression are broadly similar.

Suggested Citation

  • Cam Donaldson & Andrew Jones & Tracy Mapp & Jan Abel Olson, 1998. "Limited dependent variables in willingness to pay studies: applications in health care," Applied Economics, Taylor & Francis Journals, vol. 30(5), pages 667-677.
  • Handle: RePEc:taf:applec:v:30:y:1998:i:5:p:667-677
    DOI: 10.1080/000368498325651
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    Citations

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    Cited by:

    1. Andreas Kontoleon & Timothy Swanson, 2003. "The Willingness to Pay for Property Rights for the Giant Panda: Can a Charismatic Species Be an Instrument for Nature Conservation?," Land Economics, University of Wisconsin Press, vol. 79(4), pages 483-499.
    2. repec:spr:agfoec:v:6:y:2018:i:1:d:10.1186_s40100-018-0096-2 is not listed on IDEAS
    3. Seung-Hoon Yoo, 2004. "Determinants of subscription time for portable internet service," Applied Economics Letters, Taylor & Francis Journals, vol. 11(15), pages 931-934.
    4. John E. Ataguba & Hyacinth E. Ichoku & William M. Fonta, 2008. "Estimating the willingness to pay for community healthcare insurance in rural Nigeria," Working Papers PMMA 2008-10, PEP-PMMA.
    5. Havet, Nathalie & Morelle, Magali & Remonnay, Raphaël & Carrere, Marie-Odile, 2011. "Valuing the Benefit for Cancer Patients of Receiving Blood Transfusions at Home," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 2(03), pages 1-19, August.
    6. Marie-Odile Carrère & Nathalie Havet & Magali Morelle & Raphaël Remonnay, 2008. "Analyzing the determinants of willingness-to-pay values for testing the validity of the contingent valuation method. Application to home care compared to hospital care," Post-Print halshs-00303725, HAL.
    7. Whynes, David K. & Frew, Emma & Wolstenholme, Jane L., 2003. "A comparison of two methods for eliciting contingent valuations of colorectal cancer screening," Journal of Health Economics, Elsevier, vol. 22(4), pages 555-574, July.
    8. Haddak, Mohamed Mouloud & Lefèvre, Marie & Havet, Nathalie, 2016. "Willingness-to-pay for road safety improvement," Transportation Research Part A: Policy and Practice, Elsevier, vol. 87(C), pages 1-10.
    9. van der Star, Sanne M. & van den Berg, Bernard, 2011. "Individual responsibility and health-risk behaviour: A contingent valuation study from the ex ante societal perspective," Health Policy, Elsevier, vol. 101(3), pages 300-311, August.
    10. Elisabetta Strazzera & Margarita Genius, 2004. "The Copula Approach to Sample Selection Modelling: An Application to the Recreational Value of Forests," Working Papers 2004.73, Fondazione Eni Enrico Mattei.
    11. Nathalie Havet & Magali Morelle & Alexis Penot & Raphaël Remonnay, 2012. "The information content of the WTP-WTA gap: An empirical analysis among severely ill patients," Working Papers 1213, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    12. Pavel, Md Sadik & Chakrabarty, Sayan & Gow, Jeff, 2014. "Assessing willingness to pay for health care quality improvements," MPRA Paper 68591, University Library of Munich, Germany.
    13. Mataria, Awad & Donaldson, Cam & Luchini, Stephane & Moatti, Jean-Paul, 2004. "A stated preference approach to assessing health care-quality improvements in Palestine: from theoretical validity to policy implications," Journal of Health Economics, Elsevier, vol. 23(6), pages 1285-1311, November.
    14. Nathalie Havet & Magali Morelle & Raphaël Remonnay & Marie-Odile Carrere, 2012. "Cancer patients’ willingness to pay for blood transfusions at home: results from a contingent valuation study in a French cancer network," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 13(3), pages 289-300, June.
    15. Callan, Aoife & O'Shea, Eamon, 2015. "Willingness to pay for telecare programmes to support independent living: Results from a contingent valuation study," Social Science & Medicine, Elsevier, vol. 124(C), pages 94-102.
    16. Sun, Chuanwang & Yuan, Xiang & Yao, Xin, 2016. "Social acceptance towards the air pollution in China: Evidence from public's willingness to pay for smog mitigation," Energy Policy, Elsevier, vol. 92(C), pages 313-324.
    17. Owusu, Victor, 2012. "Assessing Consumer Willingness to Pay a Premium for Organic Food Product: Evidence from Ghana," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 123394, International Association of Agricultural Economists.
    18. repec:spr:aphecp:v:15:y:2017:i:5:d:10.1007_s40258-017-0325-y is not listed on IDEAS
    19. Mataria, Awad & Giacaman, Rita & Khatib, Rana & Moatti, Jean-Paul, 2006. "Impoverishment and patients' "willingness" and "ability" to pay for improving the quality of health care in Palestine: An assessment using the contingent valuation method," Health Policy, Elsevier, vol. 75(3), pages 312-328, February.
    20. repec:spr:aphecp:v:16:y:2018:i:2:d:10.1007_s40258-017-0366-2 is not listed on IDEAS
    21. Fu, Tsu-Tan & Lin, Yih-Ming & Huang, Chung L., 2011. "Willingness to pay for obesity prevention," Economics & Human Biology, Elsevier, vol. 9(3), pages 316-324, July.
    22. María Xosé Vázquez & Jorge E. Araña & Carmelo J. León, 2006. "Economic evaluation of health effects with preference imprecision," Health Economics, John Wiley & Sons, Ltd., vol. 15(4), pages 403-417.
    23. Eamon O’Shea & Jennifer Stewart & Cam Donaldson & Phil Shackley, 2001. "Eliciting Preferences for Resource Allocation in Health Care," The Economic and Social Review, Economic and Social Studies, vol. 32(3), pages 217-238.
    24. Maria Ana Odejar & Kostas Mavromaras & Mandy Ryan, 2004. "Messy Data Modelling in Health Care Contingent Valuation Studies," Econometric Society 2004 North American Summer Meetings 406, Econometric Society.

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