The Contingent Valuation Method in Health Care: An Economic Evaluation of Alzheimer’s Disease

118 Pages·2003·3.381 MB·English

by  Sandra Nocera, Harry Telser, Dario Bonato (auth.)

The Contingent Valuation Method in Health Care
Developments in Health Economics and Public Policy
VOLUME 8
Series Editors
Peter Zweifel, University of ZUrich, Switzerland
H.E. Frech III, University of California, Santa Barbara, U.S.A.
The Contingent Valuation
Method in Health Care
An Economic Evaluation of
Alzheimer's Disease
By
Sandra Nocera
University of Zurich, Switzerland
Harry Telser
University of Zurich, Switzerland
and
Dario Bonato
Cantonal Bank of Zurich, Switzerland
SPRlNGER-SCIENCE+BUSINESS MEDIA, B.V.
A C.I.P. Catalogue record for this book is available from the Library of Congress.
ISBN 978-1-4613-4805-4 ISBN 978-1-4419-9133-1 (eBook)
DOI 10.1007/978-1-4419-9133-1
Printed an acid-free paper
AlI Rights Reserved
© 2003 Springer Science+Business Media Dordrecht
Originally published by Kluwer Academic Publishers in 2003
Softcover reprint ofthe hardcover Ist edition 2003
No part of this work may be reproduced, stored in a retrieval system, or transmitted
in any form or by any means, electronic, mechanical, photocopying, microfilming, recording
or otherwise, without written permission from the Publisher, with the exception
of any material supplied specifically for the purpose of being entered
and executed on a computer system, for exclusive use by the purchaser of the work.
Contents
Preface IX
List of Abbreviations Xl
Chapter 1: Introduction 1
1. The contingent valuation method 1
2. Alzheimer's disease 2
3. Study objectives 3
4. Organization of the book 5
Chapter 2: Study Design 7
1. Economic burden of Alzheimer's disease 8
2. Program 'care' - helping caregivers 10
3. Program 'diagnosis' - detecting AD early 11
4. Program 'research' - search for a cure of AD 13
5. Financing of the programs 13
Chapter 3: Elicitation Methods 15
1. Continuous contingent valuation format 16
2. Discrete contingent valuation format 16
3. Biases in contingent valuation studies 17
3.1 Yea-saying 18
The Contingent Valuation Method in Health Care
VI
3.2 Protest answers 18
3.3 Question ordering bias 19
3.4 Payment vehicle bias 19
3.5 Embedding effect 19
3.6 Warm glow effect 20
3.7 Information bias 20
4. Chosen elicitation techniques 20
4.1 Dichotomous choice (DC) format 22
4.2 Dissonance-minimizing (DM) format 22
4.3 Payment card (PC) format 24
Chapter 4: Estimation Methods 27
1. Estimation methods for the discrete CV (DC and DM) 28
1.1 Logistic regression analysis 28
1.2 Nonparametric method 32
2. Estimation methods for payment card (PC) 33
Chapter 5: Data 35
1. Sample structure and data collection 35
2. Descriptive statistics 36
Chapter 6: Results 41
1. Program 'care' with taxes 41
1.1 Data 41
1.2 Dichotomous choice (DC) format 42
1.3 Dissonance minimizing (DM) format 46
1.4 Payment card (PC) format 48
1.5 Overview of the tax financed care program 50
2. Program 'diagnosis' 51
2.1 Data 51
2.2 Dichotomous choice (DC) format 51
2.3 Dissonance minimizing (DM) format 52
2.4 Payment card (PC) format 53
2.5 Overview of insurance financed diagnosis program 53
3. Program 'research' 54
3.1 Data 54
3.2 Dichotomous choice (DC) format 54
3.3 Dissonance minimizing (DM) format 55
3.4 Payment card (PC) format 56
3.5 Overview of the research program 56
The Contingent Valuation Method in Health Care
Vll
Chapter 7: Possible Reasons for Variation in the WTP values 57
1. Mean versus median WTP 57
2. Yea-saying and protest answers 59
3. Question ordering 61
4. Payment vehicle 62
5. Representation of the valuation function 64
6. Warm glow effect 66
7. Information bias 68
Chapter 8: Cost-benefit analysis 69
1. Cost-benefit analysis for the program 'care' 70
2. Cost-benefit analysis for the program 'diagnosis' 72
3. Cost-benefit analysis for the program 'research' 75
4. Policy implications 76
Chapter 9: Conclusions 79
1. Summary 79
2. Guideline for a contingent valuation study 82
Chapter 10 : Appendix 85
1. Correlation matrix 85
2. Detail diagnosis 86
3. Detail Research 90
4. Detail care with insurance 94
5. Questionnaires 97
5.1 Questionnaire for programs 'diagnosis' and 'care'
with taxes (DC method), full version 97
5.2 Questionnaire for programs 'diagnosis' and 'care'
with taxes (DM method), short version 103
5.3 Questionnaire for programs 'research' and 'care'
with insurance (PC method), short version 105
Acknowledgments 107
References 109
Index 115
Preface
In the future, as our society becomes older and older, an increasing number
of people will be confronted with Alzheimer's disease. Some will suffer from
the illness themselves, others will see parents, relatives, their spouse or a
close friend afflicted by it. Even now, the psychological and financial burden
caused by Alzheimer's disease is substantial, most of it borne by the patient
and her family. Improving the situation for the patients and their caregivers
presents a challenge for societies and decision makers.
Our work contributes to improving the in decision making situation con
cerning Alzheimer's disease. At a fundamental level, it addresses methodo
logical aspects of the contingent valuation method and gives a holistic view
of applying the contingent valuation method for use in policy. We show all
stages of a contingent valuation study beginning with the design, the choice
of elicitation techniques and estimation methods for willingness-to-pay, the
use of the results in a cost-benefit analysis, and finally, the policy implica
tions resulting from our findings. We do this by evaluating three possible
programs dealing with Alzheimer's disease. The intended audience of this
book are health economists interested in methodological problems of contin
gent valuation studies, people involved in health care decision making, plan
ning, and priority setting, as well as people interested in Alzheimer's disease.
We would like to thank the many people and institutions who have pro
vided their help with this project. Without the financial support by the Alz
heimer Forum and the Swiss National Science Foundation, this book would
not have been possible. Furthermore, we are grateful to Robert E. Leu, Peter
Zweifel, Ted Frech and Markus Konig for their very helpful comments on
the text. Finally, we would like to thank Philip Powell for proofreading the
manuscript and improving our English.
List of Abbreviations
AD Alzheimer's disease
CHF Swiss Francs, exchange rate October 2000: US$ 1 = CHF 1.70
COl cost-of-illness
CV contingent valuation
DC dichotomous choice
DM dissonance-minimizing
GDP gross domestic product
LR likelihood-ratio
ML maximum likelihood
NOAA The Oceanic and Atmospheric Administration
OLS ordinary least squares
PC payment card
WTP willingness-to-pay
Chapter 1
INTRODUCTION
1. THE CONTINGENT VALUATION METHOD
Health is valued as one of the most precious goods which led to claims for
equal access to health care regardless of an individual's ability to pay. For
this reason industrialized countries deviate from the principles of a market
economy in allocating health goods, even if they are otherwise organized
through market principles. However, rising health care costs have led to a
number of legislative measures which all had the objective of reducing the
rate of increase in public health care expenditure. Besides the goal of equal
access to health goods the efficiency goal has become equally important.
Therefore, health care systems are challenged by determining the best way to
allocate scarce resources among alternative uses (Sloan and Conover, 1995).
There are numerous approaches to allocating health resources. One pos
sible approach is the cost-benefit analysis (CBA) which expresses both bene
fits and costs of a health program or intervention in units of money. If a pro
gram's benefits exceed its cost a positive net social benefit results and the
implementation of this program is worthwhile. The obvious problem ofCBA
is assigning a monetary value to benefits. Willingness-to-pay (WTP) is one
possible method to measure benefits in monetary terms. WTP expresses an
individual's maximum utility she gains by consuming a good. Since most
health goods are allocated in regulated markets WTP can rarely be observed
from individuals' actual behaviour (revealed preferences). An alternative to
the method of revealed preferences are stated preferences, viz. the contingent
valuation (CV) method which is widely used for the estimation of environ
mental benefits. The CV method measures the value of a non-market good