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Economic evaluation of health effects with preference imprecision

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  • María Xosé Vázquez
  • Jorge E. Araña
  • Carmelo J. León

Abstract

The estimation of economic benefits of health effects through direct methods, such as contingent valuation, presents the problem of preference imprecision. This paper deals with this problem by proposing an elicitation method that allows the subject to state an interval for willingness to pay, without inducing any specific amount as a response. The paper also analyzes the effects of the context where changes in health occur on the associated imprecision level and the estimates, by comparing a situation without context with another in which effects are due to atmospheric pollution. The econometric modelling develops a Bayesian estimation method for censored intervals, which models the existing uncertainty between the lower and upper limits derived from the elicitation process. Results prove that data dispersion is significantly higher for the non‐contextual scenario, and increases for the most severe symptoms. Copyright © 2006 John Wiley & Sons, Ltd.

Suggested Citation

  • María Xosé Vázquez & Jorge E. Araña & Carmelo J. León, 2006. "Economic evaluation of health effects with preference imprecision," Health Economics, John Wiley & Sons, Ltd., vol. 15(4), pages 403-417, April.
    • Handle: RePEc:wly:hlthec:v:15:y:2006:i:4:p:403-417
    DOI: 10.1002/hec.1079
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    2. Li, Hui & Jenkins-Smith, Hank C. & Silva, Carol L. & Berrens, Robert P. & Herron, Kerry G., 2009. "Public support for reducing US reliance on fossil fuels: Investigating household willingness-to-pay for energy research and development," Ecological Economics, Elsevier, vol. 68(3), pages 731-742, January.
    3. Cecilia Håkansson, 2008. "A new valuation question: analysis of and insights from interval open-ended data in contingent valuation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 39(2), pages 175-188, February.
    4. Dekker, Thijs & Hess, Stephane & Brouwer, Roy & Hofkes, Marjan, 2016. "Decision uncertainty in multi-attribute stated preference studies," Resource and Energy Economics, Elsevier, vol. 43(C), pages 57-73.

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