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Valuation of Human Health: An Integrated Model of Willingness to Pay for Mortality and Morbidity Risk Reductions

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Listed:
  • Shelby Gerking
  • Mark Dickie
  • Marcella Veronesi

Abstract

This paper develops and applies an integrated model of human mortality and morbidity valuation that is consistent with principles of welfare economics. The standard expected utility model of one person facing two health states (alive and dead) is extended to a setting in which two family members (a parent and a child) face three health states (healthy, sick, and dead). A key finding is that total health benefits of public programs equate to the sum of willingness to pay for reduced mortality risk plus a fraction of the willingness to pay for reduced morbidity risk. Implications of the integrated model are tested using two field data sets from the U.S. on skin cancer and leukemia risk reductions. Results obtained show how the integrated model can be used to increase the accuracy of health benefit estimation for benefit-cost analyses as well as for the design of public hazard reduction programs.

Suggested Citation

  • Shelby Gerking & Mark Dickie & Marcella Veronesi, 2012. "Valuation of Human Health: An Integrated Model of Willingness to Pay for Mortality and Morbidity Risk Reductions," NCEE Working Paper Series 201207, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Oct 2012.
  • Handle: RePEc:nev:wpaper:wp201207
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    File URL: https://www.epa.gov/environmental-economics/working-paper-valuation-human-health-integrated-model-willingness-pay
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Rheinberger, Christoph M. & Herrera-Araujo, Daniel & Hammitt, James K., 2016. "The value of disease prevention vs treatment," Journal of Health Economics, Elsevier, pages 247-255.
    2. Veronesi, Marcella & Reutemann, Tim & Zabel, Astrid & Engel, Stefanie, 2015. "Designing REDD+ schemes when forest users are not forest landowners: Evidence from a survey-based experiment in Kenya," Ecological Economics, Elsevier, pages 46-57.
    3. Cremer, Helmuth & Pestieau, Pierre, 2016. "Taxing Pensions," IZA Discussion Papers 9821, Institute for the Study of Labor (IZA).
    4. Martina Menon & Federico Perali & Marcella Veronesi, 2013. "Preferences for Social Inclusion: Empirical Evidence from Juvenile Rehabilitation in Italy," Working Papers 18/2013, University of Verona, Department of Economics.
    5. Parsons, George R. & Myers, Kelley, 2016. "Fat tails and truncated bids in contingent valuation: An application to an endangered shorebird species," Ecological Economics, Elsevier, vol. 129(C), pages 210-219.
    6. Veronesi, Marcella & Chawla, Fabienne & Maurer, Max & Lienert, Judit, 2014. "Climate change and the willingness to pay to reduce ecological and health risks from wastewater flooding in urban centers and the environment," Ecological Economics, Elsevier, vol. 98(C), pages 1-10.
    7. Halaburda, Hanna & Jullien, Bruno & Yehezkel, Yaron, 2016. "Dynamic Competition with Network Externalities: Why History Matters," CEPR Discussion Papers 11205, C.E.P.R. Discussion Papers.
    8. repec:kap:enreec:v:67:y:2017:i:3:d:10.1007_s10640-016-0033-3 is not listed on IDEAS

    More about this item

    Keywords

    willingness to pay; children; environmental hazards; health; integrated analysis; morbidity; mortality; value of statistical life; cancer; stated preference;

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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