IDEAS home Printed from https://ideas.repec.org/a/spr/eujhec/v21y2020i8d10.1007_s10198-020-01231-7.html
   My bibliography  Save this article

Estimating the monetary value of health and capability well-being applying the well-being valuation approach

Author

Listed:
  • Sebastian Himmler

    (Erasmus University Rotterdam)

  • Job Exel

    (Erasmus University Rotterdam
    Erasmus University Rotterdam)

  • Werner Brouwer

    (Erasmus University Rotterdam)

Abstract

Background Quality of life measures going beyond health, like the ICECAP-A, are gaining importance in health technology assessment. The assessment of the monetary value of gains in this broader quality of life is needed to use these measurements in a cost-effectiveness framework. Methods We applied the well-being valuation approach to calculate a first monetary value for capability well-being in comparison to health, derived by ICECAP-A and EQ-5D-5L, respectively. Data from an online survey administered in February 2018 to a representative sample of UK citizens aged 18–65 was used (N = 1512). To overcome the endogeneity of income, we applied an instrumental variable regression. Several alternative model specifications were calculated to test the robustness of the results. Results The base case empirical estimate for the implied monetary value of a year in full capability well-being was £66,597. The estimate of the monetary value of a QALY, obtained from the same sample and using the same methodology amounted to £30,786, which compares well to previous estimates from the willingness to pay literature. Throughout the conducted robustness checks, the value of capability well-being was found to be between 1.7 and 2.6 times larger than the value of health. Conclusion While the applied approach is not without limitations, the generated insights, especially concerning the relative magnitude of valuations, may be useful for decision-makers having to decide based on economic evaluations using the ICECAP-A measure or, to a lesser extent, other (capability) well-being outcome measures.

Suggested Citation

  • Sebastian Himmler & Job Exel & Werner Brouwer, 2020. "Estimating the monetary value of health and capability well-being applying the well-being valuation approach," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 21(8), pages 1235-1244, November.
    • Handle: RePEc:spr:eujhec:v:21:y:2020:i:8:d:10.1007_s10198-020-01231-7
    DOI: 10.1007/s10198-020-01231-7
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10198-020-01231-7
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10198-020-01231-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Howley, P., 2016. "Valuing the benefits from health care interventions using life satisfaction data," Health, Econometrics and Data Group (HEDG) Working Papers 16/01, HEDG, c/o Department of Economics, University of York.
    2. Huang, Li & Frijters, Paul & Dalziel, Kim & Clarke, Philip, 2018. "Life satisfaction, QALYs, and the monetary value of health," Social Science & Medicine, Elsevier, vol. 211(C), pages 131-136.
    3. Gang Chen & Julie Ratcliffe & Billingsley Kaambwa & Nikki McCaffrey & Jeff Richardson, 2018. "Empirical Comparison Between Capability and Two Health-Related Quality of Life Measures," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 140(1), pages 175-190, November.
    4. Kinghorn, Philip, 2019. "Using deliberative methods to establish a sufficient state of capability well-being for use in decision-making in the contexts of public health and social care," Social Science & Medicine, Elsevier, vol. 240(C).
    5. Erzo F. P. Luttmer, 2005. "Neighbors as Negatives: Relative Earnings and Well-Being," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(3), pages 963-1002.
    6. Dolan, Paul, 2008. "Developing methods that really do value the ‘Q’ in the QALY," Health Economics, Policy and Law, Cambridge University Press, vol. 3(1), pages 69-77, January.
    7. Veenhoven, Ruut, 2010. "Capability and happiness: Conceptual difference and reality links," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(3), pages 344-350, June.
    8. Silvia Garrido & Ildefonso Méndez & José-María Abellán, 2013. "Analysing the Simultaneous Relationship Between Life Satisfaction and Health-Related Quality of Life," Journal of Happiness Studies, Springer, vol. 14(6), pages 1813-1838, December.
    9. Linda Ryen & Mikael Svensson, 2015. "The Willingness to Pay for a Quality Adjusted Life Year: A Review of the Empirical Literature," Health Economics, John Wiley & Sons, Ltd., vol. 24(10), pages 1289-1301, October.
    10. Engel, Lidia & Bryan, Stirling & Noonan, Vanessa K. & Whitehurst, David G.T., 2018. "Using path analysis to investigate the relationships between standardized instruments that measure health-related quality of life, capability wellbeing and subjective wellbeing: An application in the ," Social Science & Medicine, Elsevier, vol. 213(C), pages 154-164.
    11. Matthijs Versteegh & Saskia Knies & Werner Brouwer, 2016. "From Good to Better: New Dutch Guidelines for Economic Evaluations in Healthcare," PharmacoEconomics, Springer, vol. 34(11), pages 1071-1074, November.
    12. Layard, R. & Mayraz, G. & Nickell, S., 2008. "The marginal utility of income," Journal of Public Economics, Elsevier, vol. 92(8-9), pages 1846-1857, August.
    13. Katherine Payne & Marion McAllister & Linda M. Davies, 2013. "Valuing The Economic Benefits Of Complex Interventions: When Maximising Health Is Not Sufficient," Health Economics, John Wiley & Sons, Ltd., vol. 22(3), pages 258-271, March.
    14. Odejar, Maria & Baker, Rachel & Ryan, Mandy & Donalson, Cam & Bateman, Ian J. & Jones-Lee, M & Lancsar, Emily & Mason, Helen & Pinto Paredes, JL & Robinson, A & Shackley, P & Smith, R & Sugdem, R & Wi, 2010. "Weighting and valuing quality-adjusted life-years using stated preference methods: preliminary results from the Social Value of a QALY Project," MPRA Paper 108869, University Library of Munich, Germany.
    15. Peggy Schyns, 2001. "Income and Satisfaction in Russia," Journal of Happiness Studies, Springer, vol. 2(2), pages 173-204, June.
    16. Coast, Joanna & Flynn, Terry N. & Natarajan, Lucy & Sproston, Kerry & Lewis, Jane & Louviere, Jordan J. & Peters, Tim J., 2008. "Valuing the ICECAP capability index for older people," Social Science & Medicine, Elsevier, vol. 67(5), pages 874-882, September.
    17. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, April.
    18. Lidia Engel & Duncan Mortimer & Stirling Bryan & Scott A. Lear & David G. T. Whitehurst, 2017. "An Investigation of the Overlap Between the ICECAP-A and Five Preference-Based Health-Related Quality of Life Instruments," PharmacoEconomics, Springer, vol. 35(7), pages 741-753, July.
    19. R. Veenhoven, 2008. "Healthy happiness: effects of happiness on physical health and the consequences for preventive health care," Journal of Happiness Studies, Springer, vol. 9(3), pages 449-469, September.
    20. Terry N. Flynn & Elisabeth Huynh & Tim J. Peters & Hareth Al‐Janabi & Sam Clemens & Alison Moody & Joanna Coast, 2015. "Scoring the Icecap‐a Capability Instrument. Estimation of a UK General Population Tariff," Health Economics, John Wiley & Sons, Ltd., vol. 24(3), pages 258-269, March.
    21. Ed Diener & Shigehiro Oishi & Louis Tay, 2018. "Advances in subjective well-being research," Nature Human Behaviour, Nature, vol. 2(4), pages 253-260, April.
    22. Fujiwara, Daniel, 2013. "A general method for valuing non-market goods using wellbeing data: three-stage wellbeing valuation," LSE Research Online Documents on Economics 51577, London School of Economics and Political Science, LSE Library.
    23. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, July.
    24. Dolan, Paul & Peasgood, Tessa & White, Mathew, 2008. "Do we really know what makes us happy A review of the economic literature on the factors associated with subjective well-being," Journal of Economic Psychology, Elsevier, vol. 29(1), pages 94-122, February.
    25. Catherine Milte & Ruth Walker & Mary Luszcz & Emily Lancsar & Billingsley Kaambwa & Julie Ratcliffe, 2014. "How Important Is Health Status in Defining Quality of Life for Older People? An Exploratory Study of the Views of Older South Australians," Applied Health Economics and Health Policy, Springer, vol. 12(1), pages 73-84, February.
    26. Helen Mason & Michael Jones‐Lee & Cam Donaldson, 2009. "Modelling the monetary value of a QALY: a new approach based on UK data," Health Economics, John Wiley & Sons, Ltd., vol. 18(8), pages 933-950, August.
    27. Daniel Fujiwara, 2013. "A General Method for Valuing Non-Market Goods Using Wellbeing Data: Three-Stage Wellbeing Valuation," CEP Discussion Papers dp1233, Centre for Economic Performance, LSE.
    28. Werner Brouwer & Pieter Baal & Job Exel & Matthijs Versteegh, 2019. "When is it too expensive? Cost-effectiveness thresholds and health care decision-making," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(2), pages 175-180, March.
    29. Jerry Hausman, 2012. "Contingent Valuation: From Dubious to Hopeless," Journal of Economic Perspectives, American Economic Association, vol. 26(4), pages 43-56, Fall.
    30. Weatherly, Helen & Drummond, Michael & Claxton, Karl & Cookson, Richard & Ferguson, Brian & Godfrey, Christine & Rice, Nigel & Sculpher, Mark & Sowden, Amanda, 2009. "Methods for assessing the cost-effectiveness of public health interventions: Key challenges and recommendations," Health Policy, Elsevier, vol. 93(2-3), pages 85-92, December.
    31. Hareth Al‐Janabi & Terry N. Flynn & Tim J. Peters & Stirling Bryan & Joanna Coast, 2015. "Test–Retest Reliability of Capability Measurement in the UK General Population," Health Economics, John Wiley & Sons, Ltd., vol. 24(5), pages 625-630, May.
    32. Makai, Peter & Brouwer, Werner B.F. & Koopmanschap, Marc A. & Stolk, Elly A. & Nieboer, Anna P., 2014. "Quality of life instruments for economic evaluations in health and social care for older people: A systematic review," Social Science & Medicine, Elsevier, vol. 102(C), pages 83-93.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Chris Sampson’s journal round-up for 26th October 2020
      by Chris Sampson in The Academic Health Economists' Blog on 2020-10-26 12:00:03

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sebastian Himmler & Jannis Stöckel & Job van Exel & Werner B. F. Brouwer, 2021. "The value of health—Empirical issues when estimating the monetary value of a quality‐adjusted life year based on well‐being data," Health Economics, John Wiley & Sons, Ltd., vol. 30(8), pages 1849-1870, August.
    2. Himmler, Sebastian & Jonker, Marcel & van Krugten, Frédérique & Hackert, Mariska & van Exel, Job & Brouwer, Werner, 2022. "Estimating an anchored utility tariff for the well-being of older people measure (WOOP) for the Netherlands," Social Science & Medicine, Elsevier, vol. 301(C).
    3. Al-Janabi, Hareth & Wittenberg, Eve & Donaldson, Cam & Brouwer, Werner, 2022. "The relative value of carer and patient quality of life: A person trade-off (PTO) study," Social Science & Medicine, Elsevier, vol. 292(C).
    4. Kinghorn, Philip & Afentou, Nafsika, 2021. "Eliciting a monetary threshold for a year of sufficient capability to inform resource allocation decisions in public health and social care," Social Science & Medicine, Elsevier, vol. 279(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cassandra Mah & Vanessa K. Noonan & Stirling Bryan & David G. T. Whitehurst, 2021. "Empirical Validity of a Generic, Preference-Based Capability Wellbeing Instrument (ICECAP-A) in the Context of Spinal Cord Injury," The Patient: Patient-Centered Outcomes Research, Springer;International Academy of Health Preference Research, vol. 14(2), pages 223-240, March.
    2. Giulia Greco & Paula Lorgelly & Inthira Yamabhai, 2016. "Outcomes in Economic Evaluations of Public Health Interventions in Low‐ and Middle‐Income Countries: Health, Capabilities and Subjective Wellbeing," Health Economics, John Wiley & Sons, Ltd., vol. 25(S1), pages 83-94, February.
    3. Deckers Thomas & Falk Armin & Schildberg-Hörisch Hannah, 2016. "Nominal or Real? The Impact of Regional Price Levels on Satisfaction with Life," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 16(3), pages 1337-1358, September.
    4. Binder, Martin & Coad, Alex, 2013. "“I'm afraid I have bad news for you…” Estimating the impact of different health impairments on subjective well-being," Social Science & Medicine, Elsevier, vol. 87(C), pages 155-167.
    5. Howley, Peter, 2017. "Less money or better health? Evaluating individual’s willingness to make trade-offs using life satisfaction data," Journal of Economic Behavior & Organization, Elsevier, vol. 135(C), pages 53-65.
    6. Kaiser, Caspar, 2018. "People do not adapt to income changes: A re-evaluation of the dynamic effects of (reference) income on life satisfaction with GSOEP and UKHLS data," INET Oxford Working Papers 2018-07, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    7. Romina Boarini & Marc Fleurbaey & Fabrice Murtin & Paul Schreyer, 2022. "Well‐being during the Great Recession: new evidence from a measure of multi‐dimensional living standards with heterogeneous preferences," Scandinavian Journal of Economics, Wiley Blackwell, vol. 124(1), pages 104-138, January.
    8. Stutzer, Alois & Frey, Bruno S., 2012. "Recent Developments in the Economics of Happiness: A Selective Overview," IZA Discussion Papers 7078, Institute of Labor Economics (IZA).
    9. Philippe Tessier & Josselin Thuilliez, 2018. "Does freedom make a difference?," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(8), pages 1189-1205, November.
    10. Awaworyi Churchill, Sefa & Smyth, Russell & Farrell, Lisa, 2020. "Fuel poverty and subjective wellbeing," Energy Economics, Elsevier, vol. 86(C).
    11. Anna Maccagnan & Sam Wren-Lewis & Helen Brown & Tim Taylor, 2019. "Wellbeing and Society: Towards Quantification of the Co-benefits of Wellbeing," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 141(1), pages 217-243, January.
    12. Langchuan Peng, 2017. "Estimating Income-Dependent Relative Income Effects in the UK," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 133(2), pages 527-542, September.
    13. Himmler, Sebastian & Jonker, Marcel & van Krugten, Frédérique & Hackert, Mariska & van Exel, Job & Brouwer, Werner, 2022. "Estimating an anchored utility tariff for the well-being of older people measure (WOOP) for the Netherlands," Social Science & Medicine, Elsevier, vol. 301(C).
    14. S. Olofsson & U.-G. Gerdtham & L. Hultkrantz & U. Persson, 2019. "Value of a QALY and VSI estimated with the chained approach," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(7), pages 1063-1077, September.
    15. Sebastian Himmler & Jannis Stöckel & Job van Exel & Werner B. F. Brouwer, 2021. "The value of health—Empirical issues when estimating the monetary value of a quality‐adjusted life year based on well‐being data," Health Economics, John Wiley & Sons, Ltd., vol. 30(8), pages 1849-1870, August.
    16. Matthew Franklin & Katherine Payne & Rachel A. Elliott, 2018. "Quantifying the Relationship between Capability and Health in Older People: Can’t Map, Won’t Map," Medical Decision Making, , vol. 38(1), pages 79-94, January.
    17. Bhuiyan, Muhammad Faress & Ivlevs, Artjoms, 2019. "Micro-entrepreneurship and subjective well-being: Evidence from rural Bangladesh," Journal of Business Venturing, Elsevier, vol. 34(4), pages 625-645.
    18. Nguyen, Ha & Duncan, Alan, 2015. "Macroeconomic fluctuations in home countries and immigrants’ well-being: New evidence from Down Under," MPRA Paper 69593, University Library of Munich, Germany, revised Feb 2016.
    19. Yuta J. Masuda & Jason R. Williams & Heather Tallis, 2021. "Does Life Satisfaction Vary with Time and Income? Investigating the Relationship Among Free Time, Income, and Life Satisfaction," Journal of Happiness Studies, Springer, vol. 22(5), pages 2051-2073, June.
    20. Ricky N. Lawton & Iulian Gramatki & Will Watt & Daniel Fujiwara, 2021. "Does Volunteering Make Us Happier, or Are Happier People More Likely to Volunteer? Addressing the Problem of Reverse Causality When Estimating the Wellbeing Impacts of Volunteering," Journal of Happiness Studies, Springer, vol. 22(2), pages 599-624, February.

    More about this item

    Keywords

    Capability approach; Economic evaluation; Value of health; Subjective well-being; Well-being valuation;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:eujhec:v:21:y:2020:i:8:d:10.1007_s10198-020-01231-7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.