Subjective Well-being as a Measure of Welfare and Equity: The Case of Choice Policies in Health Care

Valentina Zigante

CESifo Economic Studies, 2011, vol. 57, issue 4, 715-739

Abstract: Choice and competition policies in public services are popular reform strategies in many European countries. Using the case of health care in the UK, this article analyses the effects of choice and competition policies by using subjective well-being (SWB) as an indicator of welfare and equity. Existing literature on welfare effects is focused on measuring efficiency and quality and it is here that SWB offers an alternative perspective. In this article, I use SWB to assess the welfare effects of the choice of hospital policy in the English NHS. Choice preferences are then analysed with a particular focus on the views of different social groups and the results are related to the overall welfare effects of choice with the purpose of capturing equity effects. Results indicate overall positive welfare effects of choice and competition with marked differences between social groups. While it is groups with lower income and lower education that state a higher demand choice, the positive welfare effects I identify are felt most strongly by high income and high education groups. The results highlight the previously debated equity problem arising from choice and competition policies in health care. (JEL codes: D63, I11, I14) Copyright The Author 2011. Published by Oxford University Press on behalf of Ifo Institute for Economic Research, Munich. All rights reserved. For permissions, please email: journals.permissions@oup.com, Oxford University Press.

Date: 2011
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