Presenter:

Sylvia Brandt

Authors:

Sylvia Brandt, Michael Hanemann

Chair: TBA; Discussant: Allen Goodman Mon June 5, 2006 15:30-17:00 Room 326

The valuation of asthma morbidity is significant for environmental and health policies. The total direct and indirect cost of asthma in the U.S. was estimated to be $6.2 billion in 1990 and $12.7 billion in 1998. Both the intangible psychosocial costs of asthma and disutility of risk avoiding/mitigating behavior are omitted from these estimates of the economic burden of asthma. Cost of illness studies therefore should be taken as a lower bound of the true cost of asthma. In this paper we discuss two approaches to estimating the willingness to pay (WTP) for reduced asthma morbidity, contingent valuation and health production function. The study population includes 250 children ages 5-11 with clinically diagnosed asthma, residing in a section of Fresno County, California. Asthma symptoms, including coughing, wheezing and/or shortness of breath, ranged from mild and intermittent to severe and persistent in this group. Detailed health measures (including atopy and pulmonary function), utilization of health services, levels of antigens in the households and exposures to criteria air pollutants were collected as part of a five-year epidemiological study. We administered two economic surveys to measure 1) households’ perceptions of risks to an asthmatic child, 2) averting and/or mitigating actions taken, and 3) households’ stated willingness-to-pay for a reduction in their children’s asthma morbidity. In the health production model the health outcome is a function of exposure to asthma triggers, mitigating and averting behavior and household’s perceived risks. We find that variation in WTP is explained by attitudes towards asthma specific health investments including concerns of associated risks and perceived effectiveness. Furthermore, the observed racial differences in willingness to pay are strongly correlated with the elements of the Health Beliefs Model and measures of self-efficacy. The survey data indicate that households select from a small number of large, discrete health investments and that most risk reducing behavior are daily behavioral modifications with no relevant market prices. We argue that the discrete nature of health investments and socio-cultural patterns of health care utilization make the revealed preference approach inadequate for the case of asthma. As an alternative we present a contingent valuation scenario that was specifically developed to minimize systematic variation in preferences for characteristics related to the scenario rather than the reduction in asthma morbidity. For this purpose, guided by extensive testing in focus groups, we selected a scenario based on a hypothetical asthma monitor that provides to the wearer an indicator of current asthma status. We will present the results of a dichotomous choice experiment using this hypothetical asthma monitor. We then summarize how the difference between households’ stated and revealed WTP vary by socio-demographic variables and asthma severity.