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A compensating income variation approach to valuing 34 health conditions in Iceland

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  • Asgeirsdottir, Tinna Laufey
  • Birgisdottir, Kristin Helga
  • Ólafsdóttir, Thorhildur
  • Olafsson, Sigurdur Pall

Abstract

Using data from an Icelandic health-and-lifestyle survey carried out in 2007, 2009, and 2012, we employ a compensating income variation (CIV) approach to estimate the monetary value sufficient to compensate individuals for the presence of various sub-optimal health conditions. This method is inexpensive and easy on subjects and has been applied to several desiderata that do not have revealed market prices. The CIV literature is, however, still limited in its application to health and thus information about its suitability is limited. With the aim of shedding light on the method́s appropriateness we thus provide a broad-view analysis including a spectrum of diseases and conditions that can be held up against more traditionally used methods. CIV for physical conditions vary greatly, but paralysis, fibromyalgia, chronic back pain, rheumatoid arthritis, urinary incontinence, severe headache and thyroid disease were among those consistently associated with substantial well-being reductions. Mental-health results using this method should be read with caution. The societal value of health interventions is multidimensional, including for example increased productivity in the population. However, one of the main positive aspects of increased health is undoubtedly the increased well-being of the treated subjects. Such quality-of-life effects should thus preferably be taken into account. For this reason, information on the value individuals place on recovery from various sub-optimal health conditions is useful when it comes to prioritizing scarce capital in the health sector. It is therefore vital to estimate the importance individuals place on various health states and hold them up against each other. Furthermore, this paper has scientific value as it sheds light on attributes of a potentially useful method in health evaluations.

Suggested Citation

  • Asgeirsdottir, Tinna Laufey & Birgisdottir, Kristin Helga & Ólafsdóttir, Thorhildur & Olafsson, Sigurdur Pall, 2017. "A compensating income variation approach to valuing 34 health conditions in Iceland," Economics & Human Biology, Elsevier, vol. 27(PA), pages 167-183.
    • Handle: RePEc:eee:ehbiol:v:27:y:2017:i:pa:p:167-183
    DOI: 10.1016/j.ehb.2017.06.001
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    Citations

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    Cited by:

    1. Tinna Laufey Ásgeirsdóttir & Arnar Buason & Ásthildur Margrét Jóhannsdóttir, 2023. "Valuing the Wellbeing Associated with Psychosocial Factors at Work," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 18(4), pages 1737-1759, August.
    2. Kristjana Baldursdottir & Paul McNamee & Edward C. Norton & Tinna Laufey Asgeirsdottir, 2023. "Life satisfaction and body mass index: estimating the monetary value of achieving optimal body weight," Review of Economics of the Household, Springer, vol. 21(4), pages 1215-1246, December.
    3. Ólafsdóttir, Thorhildur & Ásgeirsdóttir, Tinna Laufey & Norton, Edward C., 2020. "Valuing pain using the subjective well-being method," Economics & Human Biology, Elsevier, vol. 37(C).
    4. Ásgeirsdóttir, Tinna Laufey & Hardardottir, Hjördis & Jonbjarnardóttir, Brynja, 2023. "Putting a price on pain: The monetary compensation needed to offset welfare losses due to violence," Social Science & Medicine, Elsevier, vol. 336(C).
    5. Fink Simonsen, Nicolai & Kjær, Trine, 2021. "New Evidence of Health State Dependent Utility of Consumption: A combined survey and register study," DaCHE discussion papers 2021:2, University of Southern Denmark, Dache - Danish Centre for Health Economics.
    6. Patel, Pankaj C. & Tsionas, Mike G. & Oghazi, Pejvak, 2023. "Compensating income variation in health and subjective well-being for the self-employed," Journal of Business Research, Elsevier, vol. 160(C).
    7. Baldursdottir, Kristjana & Asgeirsdottir, Tinna Laufey & Olafsdottir, Thorhildur, 2023. "How sensitive is the compensating income variation to severity and adaptation?," Economics & Human Biology, Elsevier, vol. 49(C).
    8. Kristjana Baldursdottir & Paul McNamee & Edward C. Norton & Tinna Laufey Asgeirsdottir, 2024. "Monetary values of changes in Body Mass Index: do spouses play a role?," Review of Economics of the Household, Springer, vol. 22(4), pages 1623-1654, December.

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