Estimating the monetary value of health and capability well-being applying the well-being valuation approach

Sebastian Himmler (), Job Exel and Werner Brouwer
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Sebastian Himmler: Erasmus University Rotterdam
Job Exel: Erasmus University Rotterdam

The European Journal of Health Economics, 2020, vol. 21, issue 8, No 10, 1235-1244

Abstract: Abstract Background Quality of life measures going beyond health, like the ICECAP-A, are gaining importance in health technology assessment. The assessment of the monetary value of gains in this broader quality of life is needed to use these measurements in a cost-effectiveness framework. Methods We applied the well-being valuation approach to calculate a first monetary value for capability well-being in comparison to health, derived by ICECAP-A and EQ-5D-5L, respectively. Data from an online survey administered in February 2018 to a representative sample of UK citizens aged 18–65 was used (N = 1512). To overcome the endogeneity of income, we applied an instrumental variable regression. Several alternative model specifications were calculated to test the robustness of the results. Results The base case empirical estimate for the implied monetary value of a year in full capability well-being was £66,597. The estimate of the monetary value of a QALY, obtained from the same sample and using the same methodology amounted to £30,786, which compares well to previous estimates from the willingness to pay literature. Throughout the conducted robustness checks, the value of capability well-being was found to be between 1.7 and 2.6 times larger than the value of health. Conclusion While the applied approach is not without limitations, the generated insights, especially concerning the relative magnitude of valuations, may be useful for decision-makers having to decide based on economic evaluations using the ICECAP-A measure or, to a lesser extent, other (capability) well-being outcome measures.

Keywords: Capability approach; Economic evaluation; Value of health; Subjective well-being; Well-being valuation (search for similar items in EconPapers)
JEL-codes: I10 I30 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s10198-020-01231-7

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