Willingness to pay for health risk reductions: Differences by type of illness

Abstract

Our research identifies large systematic differences, by type of illness, in individual willingness to pay (WTP) to reduce the risk of the major health threats. These include five types of cancers (breast cancer, prostate cancer, colon cancer, lung cancer, and skin cancer), chronic heart disease (as well as sudden heart attacks), respiratory disease, strokes, diabetes, Alzheimer’s disease and traffic accidents. Our estimates take the form of individuals’ WTP to reduce the risk of experiencing specific illness profiles (i.e. the different patterns of sick-years, recovered/remission-years and/or lost life-years associated with each illness). Our results suggest that analyses which constrain the marginal utility parameters for different health states to be the same across all illnesses are too restrictive, causing the loss of valuable information for benefit-cost analyses of health, environmental and safety policies. We also find that the rank ordering of private willingness to pay for illness-specific risk reductions is highly correlated with public spending patterns by government agencies.