[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/a/wly/hlthec/v13y2004i9p901-907.html
   My bibliography  Save this article

Deriving welfare measures from discrete choice experiments: inconsistency between current methods and random utility and welfare theory

Author

Listed:
  • Emily Lancsar
  • Elizabeth Savage
Abstract
Discrete choice experiments (DCEs) are being used increasingly in health economics to elicit preferences for products and programs. The results of such experiments have been used to calculate measures of welfare or more specifically, respondents' ‘willingness to pay’ (WTP) for products and programs and their ‘marginal willingness to pay’ (MWTP) for the attributes that make up such products and programs. In this note we show that the methods currently used to derive measures of welfare from DCEs in the health economics literature are not consistent with random utility theory (RUT), or with microeconomic welfare theory more generally. The inconsistency with welfare theory is an important limitation on the use of such WTP estimates in cost–benefit analyses. We describe an alternative method of deriving measures of welfare (compensating variation) from DCEs that is consistent with RUT and is derived using welfare theory. We demonstrate its use in an empirical application to derive the WTP for asthma medication and compare it to the results elicited from the method currently used in the health economics literature. Copyright © 2004 John Wiley & Sons, Ltd.

Suggested Citation

  • 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.
    • Handle: RePEc:wly:hlthec:v:13:y:2004:i:9:p:901-907
    DOI: 10.1002/hec.870
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/hec.870
    Download Restriction: no
    File URL: https://libkey.io/10.1002/hec.870?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. Small, Kenneth A & Rosen, Harvey S, 1981. "Applied Welfare Economics with Discrete Choice Models," Econometrica, Econometric Society, vol. 49(1), pages 105-130, January.
    2. Adamowicz, Wiktor & Swait, Joffre & Boxall, Peter & Louviere, Jordan & Williams, Michael, 1997. "Perceptions versus Objective Measures of Environmental Quality in Combined Revealed and Stated Preference Models of Environmental Valuation," Journal of Environmental Economics and Management, Elsevier, vol. 32(1), pages 65-84, January.
    3. F. Reed Johnson & Melissa Ruby Banzhaf & William H. Desvousges, 2000. "Willingness to pay for improved respiratory and cardiovascular health: a multiple‐format, stated‐preference approach," Health Economics, John Wiley & Sons, Ltd., vol. 9(4), pages 295-317, June.
    4. Propper, Carol, 1990. "Contingent Valuation of Time Spent on NHS Waiting Lists," Economic Journal, Royal Economic Society, vol. 100(400), pages 193-199, Supplemen.
    5. Adamowicz W. & Louviere J. & Williams M., 1994. "Combining Revealed and Stated Preference Methods for Valuing Environmental Amenities," Journal of Environmental Economics and Management, Elsevier, vol. 26(3), pages 271-292, May.
    6. Emily Lancsar, 2002. "Deriving welfare measures from stated preference discrete choice modelling experiments, CHERE Discussion Paper No 48," Discussion Papers 48, CHERE, University of Technology, Sydney.
    7. Fernando San Miguel & Mandy Ryan & Emma McIntosh, 2000. "Applying conjoint analysis in economic evaluations: an application to menorrhagia," Applied Economics, Taylor & Francis Journals, vol. 32(7), pages 823-833.
    8. F. Reed Johnson & William H. Desvousges & Melissa C. Ruby & David Stieb & Paul De Civita, 1998. "Eliciting Stated Health Preferences," Medical Decision Making, , vol. 18(2_suppl), pages 57-67, April.
    9. Hurley, Jeremiah, 2000. "An overview of the normative economics of the health sector," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 2, pages 55-118, Elsevier.
    10. Carol Propper, 1995. "The Disutility of Time Spent on the United Kingdom's National Health Service Waiting Lists," Journal of Human Resources, University of Wisconsin Press, vol. 30(4), pages 677-700.
    11. Mandy Ryan & Jenny Hughes, 1997. "Using Conjoint Analysis to Assess Women's Preferences for Miscarriage Management," Health Economics, John Wiley & Sons, Ltd., vol. 6(3), pages 261-273, May.
    12. Louviere,Jordan J. & Hensher,David A. & Swait,Joffre D., 2000. "Stated Choice Methods," Cambridge Books, Cambridge University Press, number 9780521788304, September.
    13. Emily Lancsar & Cam Donaldson, 2005. "Discrete choice experiments in health economics: Distinguishing between the method and its application," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 6(4), pages 314-316, December.
    14. Dorte Gyrd‐Hansen & Jes Søgaard, 2001. "Analysing public preferences for cancer screening programmes," Health Economics, John Wiley & Sons, Ltd., vol. 10(7), pages 617-634, October.
    15. Scott, Anthony, 2001. "Eliciting GPs' preferences for pecuniary and non-pecuniary job characteristics," Journal of Health Economics, Elsevier, vol. 20(3), pages 329-347, May.
    16. Mandy Ryan & Sarah Wordsworth, 2000. "Sensitivity of Willingness to Pay Estimates to the Level of Attributes in Discrete Choice Experiments," Scottish Journal of Political Economy, Scottish Economic Society, vol. 47(5), pages 504-524, November.
    17. repec:bla:scotjp:v:47:y:2000:i:5:p:504-24 is not listed on IDEAS
    18. Trajtenberg, Manuel, 1989. "The Welfare Analysis of Product Innovations, with an Application to Computed Tomography Scanners," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 444-479, April.
    Full references (including those not matched with items on IDEAS)

    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. Emily Lancsar & Jordan Louviere, 2008. "Conducting Discrete Choice Experiments to Inform Healthcare Decision Making," PharmacoEconomics, Springer, vol. 26(8), pages 661-677, August.
    2. Emily Lancsar, 2002. "Deriving welfare measures from stated preference discrete choice modelling experiments, CHERE Discussion Paper No 48," Discussion Papers 48, CHERE, University of Technology, Sydney.
    3. Lancsar, Emily & Louviere, Jordan & Flynn, Terry, 2007. "Several methods to investigate relative attribute impact in stated preference experiments," Social Science & Medicine, Elsevier, vol. 64(8), pages 1738-1753, April.
    4. 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.
    5. Haghani, Milad & Bliemer, Michiel C.J. & Hensher, David A., 2021. "The landscape of econometric discrete choice modelling research," Journal of choice modelling, Elsevier, vol. 40(C).
    6. Emma McIntosh, 2006. "Using Discrete Choice Experiments within a Cost-Benefit Analysis Framework," PharmacoEconomics, Springer, vol. 24(9), pages 855-868, September.
    7. Kara Hanson & Barbara McPake & Pamela Nakamba & Luke Archard, 2005. "Preferences for hospital quality in Zambia: results from a discrete choice experiment," Health Economics, John Wiley & Sons, Ltd., vol. 14(7), pages 687-701, July.
    8. Waleska Sigüernza & Petr Mariel, 2013. "Valoración económica de los servicios sanitarios en la Comunidad Autónoma del País Vasco," Hacienda Pública Española / Review of Public Economics, IEF, vol. 207(4), pages 71-99, December.
    9. Rosalie Viney & Elizabeth Savage & Jordan Louviere, 2005. "Empirical investigation of experimental design properties of discrete choice experiments in health care," Health Economics, John Wiley & Sons, Ltd., vol. 14(4), pages 349-362, April.
    10. Emily Lancsar & Elizabeth Savage, 2004. "Deriving welfare measures from discrete choice experiments: a response to Ryan and Santos Silva," Health Economics, John Wiley & Sons, Ltd., vol. 13(9), pages 919-924, September.
    11. F Alpizar & F Carlsson & P Martinsson, 2003. "Using Choice Experiments for Non-Market Valuation," Economic Issues Journal Articles, Economic Issues, vol. 8(1), pages 83-110, March.
    12. 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.
    13. Jesús Clemente López & Pedro García Castrillo & María A. González Alvarez & Marcos Sanso Frago, 2014. "Una evaluación de la efectividad de la formación ocupacional para desempleados antes y después de la crisis económica: el caso de Aragón," Hacienda Pública Española / Review of Public Economics, IEF, vol. 208(1), pages 77-106, March.
    14. 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.
    15. Jayson L. Lusk & F. Bailey Norwood & J. Ross Pruitt, 2006. "Consumer Demand for a Ban on Antibiotic Drug Use in Pork Production," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(4), pages 1015-1033.
    16. Birol, Ekin & Kontoleon, Andreas & Smale, Melinda, 2006. "Combining revealed and stated preference methods to assess the private value of agrobiodiversity in Hungarian home gardens:," EPTD discussion papers 156, International Food Policy Research Institute (IFPRI).
    17. Richard T. Carson, 2011. "Contingent Valuation," Books, Edward Elgar Publishing, number 2489.
    18. Haghani, Milad & Bliemer, Michiel C.J. & Rose, John M. & Oppewal, Harmen & Lancsar, Emily, 2021. "Hypothetical bias in stated choice experiments: Part I. Macro-scale analysis of literature and integrative synthesis of empirical evidence from applied economics, experimental psychology and neuroimag," Journal of choice modelling, Elsevier, vol. 41(C).
    19. Mandy Ryan & Angela Bate, 2001. "Testing the assumptions of rationality, continuity and symmetry when applying discrete choice experiments in health care," Applied Economics Letters, Taylor & Francis Journals, vol. 8(1), pages 59-63.
    20. Oviedo, José L. & Caparrós, Alejandro & Ruiz-Gauna, Itziar & Campos, Pablo, 2016. "Testing convergent validity in choice experiments: Application to public recreation in Spanish stone pine and cork oak forests," Journal of Forest Economics, Elsevier, vol. 25(C), pages 130-148.

    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:13:y:2004:i:9:p:901-907. 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.