How sensitive is the compensating income variation to severity and adaptation?

Kristjana Baldursdottir, Tinna Laufey Asgeirsdottir and Thorhildur Olafsdottir

Economics & Human Biology, 2023, vol. 49, issue C

Abstract: Knowing the monetary value individuals place on health is essential in tackling resource allocation between health and other uses. However, health conditions vary greatly, not only with respect to main characteristics but also by severity and duration. We apply the compensating income variation (CIV) method to data from the Swiss Household Panel, years 2004–2019, to explore the sensitivity of CIV estimates to severity and adaptation across five different health conditions: headaches, back problems, sleep problems, fatigue, and chronic illness. Accounting for income endogeneity in the life-satisfaction equations and adjusting for individual random effects, we found the CIV estimates to range from $3184 for moderate headaches (women) to $100,066 for severe fatigue (men). Individuals with severe conditions needed to be compensated about three times more than those suffering less. Across the five conditions with two severity levels explored for adaptation, individuals only adapted to moderate headaches and severe sleep problems. In conclusion, not only does the value of health conditions vary greatly, but within each health condition its value on average triples when severe condition is reported as opposed to moderate. Adaptation plays a minor role in CIV estimates for the five health conditions explored.

Keywords: Compensating income variation; Life satisfaction; Instrumental variable; Severity; Adaptation (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1570677X22001095
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ehbiol:v:49:y:2023:i:c:s1570677x22001095

DOI: 10.1016/j.ehb.2022.101213

Access Statistics for this article

Economics & Human Biology is currently edited by J. Komlos, Inas R Kelly and Joerg Baten

More articles in Economics & Human Biology from Elsevier
Bibliographic data for series maintained by Catherine Liu ().