IDEAS home Printed from https://ideas.repec.org/a/wly/hlthec/v20y2011i3p323-330.html
   My bibliography  Save this article

How does cost matter in health‐care discrete‐choice experiments?

Author

Listed:
  • F. Reed Johnson
  • Ateesha F. Mohamed
  • Semra Özdemir
  • Deborah A. Marshall
  • Kathryn A. Phillips

Abstract

Willingness‐to‐pay (WTP) estimates derived from discrete‐choice experiments (DCEs) generally assume that the marginal utility of income is constant. This assumption is consistent with theoretical expectations when costs are a small fraction of total income. We analyze the results of five DCEs that allow direct tests of this assumption. Tests indicate that marginal utility often violates theoretical expectations. We suggest that this result is an artifact of a cognitive heuristic that recodes cost levels from a numerical scale to qualitative categories. Instead of evaluating nominal costs in the context of a budget constraint, subjects may recode costs into categories such as ‘low’, ‘medium’, and ‘high’ and choose as if the differences between categories were equal. This simplifies the choice task, but undermines the validity of WTP estimates as welfare measures. Recoding may be a common heuristic in health‐care applications when insurance coverage distorts subjects' perception of the nominal costs presented in the DCE instrument. Recoding may also distort estimates of marginal rates of substitution for other attributes with numeric levels. Incorporating ‘cheap talk’ or graphic representation of attribute levels may encourage subjects to be more attentive to absolute attribute levels. Copyright © 2010 John Wiley & Sons, Ltd.

Suggested Citation

  • F. Reed Johnson & Ateesha F. Mohamed & Semra Özdemir & Deborah A. Marshall & Kathryn A. Phillips, 2011. "How does cost matter in health‐care discrete‐choice experiments?," Health Economics, John Wiley & Sons, Ltd., vol. 20(3), pages 323-330, March.
    • Handle: RePEc:wly:hlthec:v:20:y:2011:i:3:p:323-330
    DOI: 10.1002/hec.1591
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/hec.1591
    Download Restriction: no
    File URL: https://libkey.io/10.1002/hec.1591?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
    ---><---

    References listed on IDEAS

    as
    1. Özdemir, Semra & Johnson, F. Reed & Hauber, A. Brett, 2009. "Hypothetical bias, cheap talk, and stated willingness to pay for health care," Journal of Health Economics, Elsevier, vol. 28(4), pages 894-901, July.
    2. Aadland, David & Caplan, Arthur J., 2006. "Cheap talk reconsidered: New evidence from CVM," Journal of Economic Behavior & Organization, Elsevier, vol. 60(4), pages 562-578, August.
    3. Mandy Ryan, 2004. "A comparison of stated preference methods for estimating monetary values," Health Economics, John Wiley & Sons, Ltd., vol. 13(3), pages 291-296, March.
    4. Harry Telser & Peter Zweifel, 2002. "Measuring willingness‐to‐pay for risk reduction: an application of conjoint analysis," Health Economics, John Wiley & Sons, Ltd., vol. 11(2), pages 129-139, March.
    5. Stirling Bryan & Lisa Gold & Rob Sheldon & Martin Buxton, 2000. "Preference measurement using conjoint methods: an empirical investigation of reliability," Health Economics, John Wiley & Sons, Ltd., vol. 9(5), pages 385-395, July.
    6. John A. List, 2001. "Do Explicit Warnings Eliminate the Hypothetical Bias in Elicitation Procedures? Evidence from Field Auctions for Sportscards," American Economic Review, American Economic Association, vol. 91(5), pages 1498-1507, December.
    7. Nick Hanley & Mandy Ryan & Robert Wright, 2003. "Estimating the monetary value of health care: lessons from environmental economics," Health Economics, John Wiley & Sons, Ltd., vol. 12(1), pages 3-16, January.
    8. Laura O. Taylor & Ronald G. Cummings, 1999. "Unbiased Value Estimates for Environmental Goods: A Cheap Talk Design for the Contingent Valuation Method," American Economic Review, American Economic Association, vol. 89(3), pages 649-665, June.
    9. J.M.C. Santos Silva, 2004. "Deriving welfare measures in discrete choice experiments: a comment to Lancsar and Savage (2)," Health Economics, John Wiley & Sons, Ltd., vol. 13(9), pages 913-918, September.
    10. Mandy Ryan, 2004. "Deriving welfare measures in discrete choice experiments: a comment to Lancsar and Savage (1)," Health Economics, John Wiley & Sons, Ltd., vol. 13(9), pages 909-912, September.
    11. James Murphy & Thomas Stevens & Darryl Weatherhead, 2005. "Is Cheap Talk Effective at Eliminating Hypothetical Bias in a Provision Point Mechanism?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 30(3), pages 327-343, March.
    12. Tara Maddala & Kathryn A. Phillips & F. Reed Johnson, 2003. "An experiment on simplifying conjoint analysis designs for measuring preferences," Health Economics, John Wiley & Sons, Ltd., vol. 12(12), pages 1035-1047, December.
    13. Emily Lancsar & Elizabeth Savage, 2004. "Deriving welfare measures from discrete choice experiments: inconsistency between current methods and random utility and welfare theory," Health Economics, John Wiley & Sons, Ltd., vol. 13(9), pages 901-907, September.
    14. Jan Abel Olsen & Richard D. Smith, 2001. "Theory versus practice: a review of ‘willingness‐to‐pay’ in health and health care," Health Economics, John Wiley & Sons, Ltd., vol. 10(1), pages 39-52, January.
    Full references (including those not matched with items on IDEAS)

    Citations

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


    Cited by:

    1. Ling-Hsiang Chuang & Huanlan Zhang & Tianqi Hong & Shitong Xie, 2024. "Evaluating the Preferences and Willingness-to-Pay for Oral Antidiabetic Drugs Among Patients with Type 2 Diabetes Mellitus in China: A Discrete Choice Experiment," The Patient: Patient-Centered Outcomes Research, Springer;International Academy of Health Preference Research, vol. 17(5), pages 565-574, September.
    2. Axel Mühlbacher & Peter Zweifel & Anika Kaczynski & F. Johnson, 2015. "Experimental measurement of preferences in health care using best-worst scaling (BWS): theoretical and statistical issues," Health Economics Review, Springer, vol. 6(1), pages 1-12, December.
    3. Regier, Dean A. & Watson, Verity & Burnett, Heather & Ungar, Wendy J., 2014. "Task complexity and response certainty in discrete choice experiments: An application to drug treatments for juvenile idiopathic arthritis," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 50(C), pages 40-49.
    4. Milad Haghani & Michiel C. J. Bliemer & John M. Rose & Harmen Oppewal & Emily Lancsar, 2021. "Hypothetical bias in stated choice experiments: Part I. Integrative synthesis of empirical evidence and conceptualisation of external validity," Papers 2102.02940, arXiv.org.
    5. Haghani, Milad & Bliemer, Michiel C.J. & Rose, John M. & Oppewal, Harmen & Lancsar, Emily, 2021. "Hypothetical bias in stated choice experiments: Part II. Conceptualisation of external validity, sources and explanations of bias and effectiveness of mitigation methods," Journal of choice modelling, Elsevier, vol. 41(C).
    6. Caplan, Arthur J. & Akhundjanov, Sherzod B. & Toll, Kristopher, 2021. "Measuring heterogeneous preferences for residential amenities," Regional Science and Urban Economics, Elsevier, vol. 87(C).
    7. Axel Mühlbacher & Anika Kaczynski & Peter Zweifel & F. Johnson, 2015. "Experimental measurement of preferences in health and healthcare using best-worst scaling: an overview," Health Economics Review, Springer, vol. 6(1), pages 1-14, December.
    8. Zhang, Jing & Reed Johnson, F. & Mohamed, Ateesha F. & Hauber, A. Brett, 2015. "Too many attributes: A test of the validity of combining discrete-choice and best–worst scaling data," Journal of choice modelling, Elsevier, vol. 15(C), pages 1-13.
    9. Axel C. Mühlbacher & Peter Zweifel & Anika Kaczynski & F. Reed Johnson, 2016. "Experimental measurement of preferences in health care using best-worst scaling (BWS): theoretical and statistical issues," Health Economics Review, Springer, vol. 6(1), pages 1-12, December.
    10. Yi Qian & Jorge Arellano & A. Brett Hauber & Ateesha F. Mohamed & Juan Marcos Gonzalez & Guy Hechmati & Francesca Gatta & Stacey Harrelson & Cynthia Campbell-Baird, 2016. "Patient, Caregiver, and Nurse Preferences for Treatments for Bone Metastases from Solid Tumors," The Patient: Patient-Centered Outcomes Research, Springer;International Academy of Health Preference Research, vol. 9(4), pages 323-333, August.
    11. Genie, Mesfin G. & Ryan, Mandy & Krucien, Nicolas, 2021. "To pay or not to pay? Cost information processing in the valuation of publicly funded healthcare," Social Science & Medicine, Elsevier, vol. 276(C).
    12. Michael Clark & Domino Determann & Stavros Petrou & Domenico Moro & Esther Bekker-Grob, 2014. "Discrete Choice Experiments in Health Economics: A Review of the Literature," PharmacoEconomics, Springer, vol. 32(9), pages 883-902, September.
    13. Scott D. Grosse & Jamison Pike & Rieza Soelaeman & J. Mick Tilford, 2019. "Quantifying Family Spillover Effects in Economic Evaluations: Measurement and Valuation of Informal Care Time," PharmacoEconomics, Springer, vol. 37(4), pages 461-473, April.
    14. Axel C. Mühlbacher & Anika Kaczynski & Peter Zweifel & F. Reed Johnson, 2016. "Experimental measurement of preferences in health and healthcare using best-worst scaling: an overview," Health Economics Review, Springer, vol. 6(1), pages 1-14, December.
    15. John Buckell & David A Hensher & Stephane Hess, 2021. "Kicking the habit is hard: A hybrid choice model investigation into the role of addiction in smoking behavior," Health Economics, John Wiley & Sons, Ltd., vol. 30(1), pages 3-19, January.
    16. Phillips Kathryn A. & Sakowski Julie Ann & Liang Su-Ying & Ponce Ninez A., 2013. "Economic Perspectives on Personalized Health Care and Prevention," Forum for Health Economics & Policy, De Gruyter, vol. 16(2), pages 23-52, June.
    17. Adele Diederich & Joffre Swait & Norman Wirsik, 2012. "Citizen Participation in Patient Prioritization Policy Decisions: An Empirical and Experimental Study on Patients' Characteristics," PLOS ONE, Public Library of Science, vol. 7(5), pages 1-10, May.

    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. Ladenburg, Jacob & Olsen, Søren Bøye, 2014. "Augmenting short Cheap Talk scripts with a repeated Opt-Out Reminder in Choice Experiment surveys," Resource and Energy Economics, Elsevier, vol. 37(C), pages 39-63.
    2. Deborah A. Marshall & F. Reed Johnson & Nathalie A. Kulin & Semra Özdemir & Judith M. E. Walsh & John K. Marshall & Stephanie Van Bebber & Kathryn A. Phillips, 2009. "How do physician assessments of patient preferences for colorectal cancer screening tests differ from actual preferences? A comparison in Canada and the United States using a stated‐choice survey," Health Economics, John Wiley & Sons, Ltd., vol. 18(12), pages 1420-1439, December.
    3. Haghani, Milad & Bliemer, Michiel C.J. & Rose, John M. & Oppewal, Harmen & Lancsar, Emily, 2021. "Hypothetical bias in stated choice experiments: Part II. Conceptualisation of external validity, sources and explanations of bias and effectiveness of mitigation methods," Journal of choice modelling, Elsevier, vol. 41(C).
    4. Harry Telser & Karolin Becker & Peter Zweifel, 2008. "Validity and Reliability of Willingness-to-Pay Estimates," The Patient: Patient-Centered Outcomes Research, Springer;International Academy of Health Preference Research, vol. 1(4), pages 283-298, October.
    5. Milad Haghani & Michiel C. J. Bliemer & John M. Rose & Harmen Oppewal & Emily Lancsar, 2021. "Hypothetical bias in stated choice experiments: Part II. Macro-scale analysis of literature and effectiveness of bias mitigation methods," Papers 2102.02945, arXiv.org.
    6. Nicolas Jacquemet & Alexander James & Stéphane Luchini & Jason Shogren, 2011. "Social Psychology and Environmental Economics: A New Look at ex ante Corrections of Biased Preference Evaluation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 48(3), pages 413-433, March.
    7. Alessandro Mengoni & Chiara Seghieri & Sabina Nuti, 2013. "The application of discrete choice experiments in health economics: a systematic review of the literature," Working Papers 201301, Scuola Superiore Sant'Anna of Pisa, Istituto di Management.
    8. Craig D. Broadbent, 2014. "Evaluating mitigation and calibration techniques for hypothetical bias in choice experiments," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 57(12), pages 1831-1848, December.
    9. Mohammed H. Alemu & Søren B. Olsen, 2017. "Can a Repeated Opt-Out Reminder remove hypothetical bias in discrete choice experiments? An application to consumer valuation of novel food products," IFRO Working Paper 2017/05, University of Copenhagen, Department of Food and Resource Economics.
    10. Karen Blumenschein & GlennC. Blomquist & Magnus Johannesson & Nancy Horn & Patricia Freeman, 2008. "Eliciting Willingness to Pay Without Bias: Evidence from a Field Experiment," Economic Journal, Royal Economic Society, vol. 118(525), pages 114-137, January.
    11. Penn, Jerrod & Hu, Wuyang, 2016. "Making the Most of Cheap Talk in an Online Survey," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236171, Agricultural and Applied Economics Association.
    12. Aadland, David & Caplan, Arthur J., 2005. "A Bayesian Examination of Anchoring Bias and Cheap Talks in Constructed Markets," 2005 Annual meeting, July 24-27, Providence, RI 19568, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. John K. Horowitz & Kenneth E. McConnell & James J. Murphy, 2013. "Behavioral foundations of environmental economics and valuation," Chapters, in: John A. List & Michael K. Price (ed.), Handbook on Experimental Economics and the Environment, chapter 4, pages 115-156, Edward Elgar Publishing.
    14. David Aadland & Arthur Caplan & Owen Phillips, 2007. "A Bayesian examination of information and uncertainty in contingent valuation," Journal of Risk and Uncertainty, Springer, vol. 35(2), pages 149-178, October.
    15. Giles Atkinson & Sian Morse-Jones & Susana Mourato & Allan Provins, 2012. "‘When to Take “No” for an Answer’? Using Entreaties to Reduce Protests in Contingent Valuation Studies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 51(4), pages 497-523, April.
    16. Rinaldo Brau & Matteo Lippi Bruni, 2008. "Eliciting the demand for long‐term care coverage: a discrete choice modelling analysis," Health Economics, John Wiley & Sons, Ltd., vol. 17(3), pages 411-433, March.
    17. Dominique Ami & Frédéric Aprahamian & Olivier Chanel & Stéphane Luchini, 2011. "A Test of Cheap Talk in Different Hypothetical Contexts: The Case of Air Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 50(1), pages 111-130, September.
    18. Stavroula Tsigou & Stathis Klonaris, 2018. "Factors affecting farmers’ WTP for innovative fertilizer against soil salinity," Working Papers 2018-3, Agricultural University of Athens, Department Of Agricultural Economics.
    19. Bosworth Ryan & Taylor Laura O., 2012. "Hypothetical Bias in Choice Experiments: Is Cheap Talk Effective at Eliminating Bias on the Intensive and Extensive Margins of Choice?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(1), pages 1-28, December.
    20. Penn, Jerrod & Hu, Wuyang, 2019. "Cheap talk efficacy under potential and actual Hypothetical Bias: A meta-analysis," Journal of Environmental Economics and Management, Elsevier, vol. 96(C), pages 22-35.

    More about this item

    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:wly:hlthec:v:20:y:2011:i:3:p:323-330. 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: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/5749 .

    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.