WEAI/AERE 2009 - Individual Paper Abstract
Title: Willingness to Pay for Health Risk Reductions: Differences by Type of Illness
Author(s): Erica H. JOHNSON, Gonzaga University; Trudy Ann Cameron, University of Oregon; J.R. DeShazo, UCLA (photo: 105 degree heat, June 2007; TAC)
Abstract: In this paper, we examine how individual willingness to pay (WTP) for health risk reductions varies with the type of health threat in question. Our research focuses on systematic differences in WTP for health risk reductions across different types of major health threats, including five types of cancers (breast cancer, prostate cancer, colon cancer, lung cancer, skin cancer), chronic heart disease (as well as sudden heart attacks), respiratory disease, strokes, diabetes, Alzheimer's disease and traffic accidents. Our empirical results suggest that the marginal disutility from each type of health state differs across categories of illness (or injury). We find a higher WTP for reducing the risk of breast cancer, prostate cancer, heart disease and heart attacks and a lower WTP for skin cancer, Alzheimer's disease and traffic accidents. We find some evidence of a "cancer premium" for some cancers but not for others. Smokers appear to have a higher WTP to avoid lung cancer and respiratory disease than non-smokers. We are also able to control for systematic heterogeneity in various subjective perceptions about individual health risks such as vulnerability to the health threat, the confidence an individual has in the medical care he or she is likely to receive and the perceived controllability of the disease through lifestyle changes. Our findings suggest that models which constrain the estimated marginal utility parameters for different health states to be the same across all illnesses may be too restrictive and may cause us to lose information that may be very valuable from a policy perspective. The main contribution of this paper is to reinforce the case for why it may not be reasonable to assume one common value for WTP for risk reductions across all types of health risks.