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The subjective costs of health losses due to chronic diseases. An alternative model for monetary appraisal

Author

Listed:
  • Ada Ferrer-i-Carbonell

    (Faculty of Economics and Econometrics and SEO Amsterdam Economics, University of Amsterdam, The Netherlands)

  • Bernard M.S. van Praag

    (Faculty of Economics and Econometrics, University of Amsterdam, The Netherlands)

Abstract

This paper proposes a method to evaluate health losses or gains by looking at the impact on well-being of a change in health status. The paper presents estimates of the equivalent income change that would be necessary to change general satisfaction with life to the same extent as a change in health satisfaction would do. In other words, the income equivalent of health satisfaction changes is estimated. Next, this health satisfaction changes are linked to specific diseases in order to estimate the income equivalent for these diseases. This method uses answers to well-being and health satisfaction questions as posed in a large German data set, distinguishing between workers and non-workers and between East and West Germans. It is found, for instance, that for West-German workers hearing impediments are on average equivalent to an income reduction of about 20%, and that heart or blood difficulties are for the same group equivalent to a 47% income reduction. Copyright © 2002 John Wiley & Sons, Ltd.

Suggested Citation

  • Ada Ferrer-i-Carbonell & Bernard M.S. van Praag, 2002. "The subjective costs of health losses due to chronic diseases. An alternative model for monetary appraisal," Health Economics, John Wiley & Sons, Ltd., vol. 11(8), pages 709-722.
    • Handle: RePEc:wly:hlthec:v:11:y:2002:i:8:p:709-722
    DOI: 10.1002/hec.696
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    References listed on IDEAS

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    1. Bernard M.S. van Praag & P. Frijters & A. Ferrer-i-Carbonell, 2000. "A Structural Model of Well-being: with an application to German Data," Tinbergen Institute Discussion Papers 00-053/3, Tinbergen Institute.
    2. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters,in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492 National Bureau of Economic Research, Inc.
    3. Bruno S. Frey & Alois Stutzer, 1999. "Measuring Preferences by Subjective Well-Being," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 155(4), pages 755-778, December.
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    5. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-659, May.
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    11. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
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    13. G. Ardine De Wit & Jan J.V. Busschbach & Frank Th. De Charro, 2000. "Sensitivity and perspective in the valuation of health status: whose values count?," Health Economics, John Wiley & Sons, Ltd., vol. 9(2), pages 109-126.
    14. Samuelson, Paul A, 1974. "Complementarity-An Essay on the 40th Anniversary of the Hicks-Allen Revolution in Demand Theory," Journal of Economic Literature, American Economic Association, vol. 12(4), pages 1255-1289, December.
    15. 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.
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    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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