The Effect of Health Status on Willingness to Pay for Morbidity and Mortality Risk Reductions

PWP-CCPR-2005-050

Abstract

Both actual and expected morbidity systematically affect individuals’ demands for both life-saving policies and preventative health care. Using a large general-population sample, we estimate a utility-theoretic model of consumer preferences across risk reduction programs targeted at a wide variety of major health threats with differing illness profiles.  Individuals’ demands for programs targeting a particular illness are higher when there is a history of that illness and when subjective risks are higher. A history of other illnesses and greater other-illness subjective risks decrease demand. These comorbidity effects operate through the marginal utilities of both (i) adverse health states and (ii)  income.