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The Subjective Costs of Health Losses due to Chronic Diseases: An Alternative Model Appraisal


  • Ferrer-i-Carbonell, Ada

    () (IAE Barcelona (CSIC))

  • van Praag, Bernard M. S.

    () (University of Amsterdam)


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, we estimate the income equivalent of health changes. Next, the health satisfaction changes are linked to specific diseases in order to estimate the income equivalent for various diseases. This method uses answers to well-being and health satisfaction questions as posed in a large German data set. We distinguish between workers and non-workers and between inhabitants of East- and West- Germany. We find, for instance, that for West-workers hearing impediments are on average equivalent to an income reduction of about 20%, and that heart blood difficulties are for the same group equivalent to a 47% income reduction.

Suggested Citation

  • Ferrer-i-Carbonell, Ada & van Praag, Bernard M. S., 2001. "The Subjective Costs of Health Losses due to Chronic Diseases: An Alternative Model Appraisal," IZA Discussion Papers 313, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp313

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    References listed on IDEAS

    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. 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. Deaton, Angus S & Paxson, Christina H, 1998. "Aging and Inequality in Income and Health," American Economic Review, American Economic Association, vol. 88(2), pages 248-253, May.
    6. Jennifer Hunt, 2000. "Why Do People Still Live in East Germany?," NBER Working Papers 7564, National Bureau of Economic Research, Inc.
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    13. Torrance, George W., 1986. "Measurement of health state utilities for economic appraisal : A review," Journal of Health Economics, Elsevier, vol. 5(1), pages 1-30, March.
    14. 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.
    15. 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.
    16. 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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    More about this item


    well-being; equivalent income; Chronic diseases; health damages; health satisfaction;

    JEL classification:

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

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