Environmental Economics

Concepts & Approaches to the Valuation of Serious Illnesses, Volume IV of Valuation of Reductions in Human Health Symptoms and Risks

This is Volume 4 of a four volume report. The project undertakes an assessment and reconciliation of attempts to value reductions in human health risks, and it develops new methods and estimates for these values. Volume 1 is the executive summmary. Volume 2 contains a comparative assessment of work on valuing health risks. Based on the assessment, a set of interim morbidity and mortality values applicable to effects of criteria air pollutants is developed. Volume 3 reports on a study developing and applying contingent valuation techniques to the types of light symptoms often attributed to air pollution. Volume 4 reports on the design of approaches for valuing serious or life threatening illnesses.
Volume 4 extends the analysis of health valuation to life threatening illness.
Section 4.2 considers alterna‘tive definitions of health and, for the study of serious illnesses resulting from environmental causes, concludes that a definition in terms of absence of symptoms should be used. The potential contributions of various pollutants to the risks of serious illnesses are reviewed, in order to choose which diseases should be studied and what ranges of risks are relevant. Specifi'c measures of health status are evaluated including symptom description, self-assessment, health risk appraisal, health indexes and multi-attribute utility functions. The first three of these are recommended for contingent valuation studies. Section 4.3 develops a life cycle explanatory framework for valuing reductions in life-threatening illness that guides the remainder of the study. Within this framework, longevity (i.e. mortality) and quality of life (as affected by morbidity) are considered together in a unified context. Young people, presented with improved prospects for greater health and longevity only after a long period of time, will heavily discount the benefits and will pay little, even though aware that their preferences many years hence will be different. Policies that promise a near-term benefit will be valued much more highly by people of any age. If people can easily substitute near term consumption for deferred consumption, they will place less value on additions to life expectancy. The capacity for consumption changes over the life cycle. An added year of life accompanied by high income or accumulated wealth, together with a high quality of leisure time, will be valued relatively highly. Latency is modelled within the life cycle framework.
Section 4.4 develops a model of choice under uncertain preferences, bringing utility theory to bear on the problem of valuing small changes in events that are thought of only infrequently and may involve low probabilities of occurrence. The model is applicable to eontingent valuation approaches to serious illness. The model assumes environmental health risks are unfamiliar to most people, and that because people seldom have occasion to think carefully about them they are uncertain about their preferences concerning them. The model leads to twelve theorems for stimulating people to obtain improved knowledge about their preferences and to state valid, consistent risk reduction values.
Section 4.5 applies the preceding sections to contingent valuation of life threatening illness. A structure for an intensive interviewing process is developed, based on techniques of in-depth interviewing. The proposed interview structure contains four modules. The first module concerns the repsondent's health experiences. The defensive measures module is the second module:The third module pertains to risk perception and risk behavior. This module teaches respondents basic notions of probability and conveys information about probabilities involved in health. Information is obtained about repsondent perceptions and attitudes towards risks. Contingent valuation questions form the fourth module. The module begins with simple questions involving certainty scenarios and mortality only, after which serious illnesses are introduced. Then life path scenarios are introduced that combine morbidity and mortality in a life cycle setting. Respondents are asked to choose among and value the scenarios, first in a certainty and then an uncertainty setting.

  • Keywords

    1. Benefits Analysis
    1. Benefits Analysis - Quantification without Monetization
    1. Benefits Analysis - Valuation - Stated Preference
    1. Benefits Analysis - Valuation - Stated Preference - Contingent Valuation
    1. Benefits Analysis - Valuation
    1. Benefits Analysis - Valuation - Cost of Damages Avoided
    1. Benefits Analysis - Valuation - Cost of Damages Avoided - Mortality
    1. Benefits Analysis - Valuation - Cost of Damages Avoided - Morbidity
    Environmental Media:
    a. Air
    a. Air - Tropospheric
    Tolley, George S.
    Babcock, Lyndon
    EPA Project Officer/ Manager:
    Carlin, Alan
    Geographic Area:
    Study Purpose:
    Empirical Application, Methodology Development & Evaluation
    Report Series:
    Valuation of Reductions in Human Health Symptoms and Risks
    Inventory Record #: EE-0092D
    List of all reports in the Series:
  • Participating Organizations

    Research Organization:

    Chicago, University ofAddress:
    City: Chicago State: IL ZIP:
    Phone: Fax:
    Funding Organization:
    Environmental Protection Agency, Office of Policy, Planning and EvaluationAddress:
    City: Washington State: DC ZIP: 20460
    Phone: Fax:
  • Report Details
    Number of Pages:
    Grant/Contract #:
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    Date Linked: 05/28/2009