Dissertation Title: "Evaluating Preferences for Health Risks"
This thesis considers different methods used to elicit individual preferences for health and safety issues in a series of three papers developed from an empirical analysis of a large national survey. The first paper explores the use of contingent valuation (CV), as elicited through willingness-to-pay (WTP), as a method for valuing mortality-risk reductions. Previous empirical work suggests that CV estimates of WTP are invalid because WTP estimates are insensitive to the quantity (or magnitude) of the good being valued. In a test of alternative visual aids to communicate magnitude of risk, we found that WTP was statistically sensitive to the magnitude of risk reduction for all groups receiving a visual aid, but not for the group that did not receive an aid. These results suggest that CV can provide valid estimates of WTP for mortality-risk reduction if appropriate methods are used to communicate the risk change to respondents.
The second paper explores the underlying axiomatic assumptions that allow one to use quality-adjusted life years (QALYs) as a health outcome measure. In an assessment of risk-neutrality and consistency in risk posture for longevity, we found that risk posture appears to depend on remaining life expectancy and other dimensions of the choice, including the difference in risk, the asymmetry of probabilities, and whether one choice alternative included a certain outcome. These results suggest that the use of QALYs as an outcome measure may be jeopardized since individual preferences for remaining longevity are not consistent.
In a third paper, we compare the use of cost-benefit analysis (CBA) and direct democracy for allocating scarce resources between prevention and treatment interventions. We found that two methods for measuring social benefits, WTP and voting, yield dissimilar policy implications, with the former suggesting that treatment programs be funded, and the latter suggesting that prevention programs be funded. Our data also indicate that general opinions about the costs and effectiveness of prevention versus treatment significantly influence voting choices, in addition to such other non-normative factors such as a bias for action. These results indicate that relying on one method for eliciting preferences for use in resource-based decisions for prevention or treatment may not be adequate.