Valuing the benefits of a health intervention using three different approaches to contingent valuation: re-treatment of mosquito bed-nets in Nigeria.

OBJECTIVES: To determine the level of willingness to pay (WTP) for re-treatment of mosquito nets and to compare the theoretical validity of WTP estimates from three contingent valuation question formats: the bidding game, binary with follow-up technique, and a novel structured haggling technique that mimicked price-taking behaviour in the study area. METHODS: WTP was elicited from randomly selected respondents from three villages in Southeast Nigeria, using pretested interviewer-administered questionnaires. Respondents' WTP for insecticide-treated nets (ITNs) was first elicited before their WTP for re-treatment of ITNs. Ordinary least-squares regression was used to assess theoretical validity. RESULTS: More than 95% of the respondents were willing to pay for re-treatment. The mean WTP was 37.1 Naira, 43.4 Naira and 49.2 Naira in the bidding game, binary with follow-up and structured haggling groups, respectively (US dollar 1.00 = 120 Naira). The WTP estimates elicited across the three question formats were statistically different (P < 0.01). Ordinary least-squares estimation showed that WTP was positively related to many variables, especially stated WTP for ITNs (P < 0.05). Structured haggling generated the highest number of statistically significant variables to explain WTP. CONCLUSIONS: The three contingent valuation approaches generated different distributions of WTP for net retreatment, possibly due to their inherent differences. Structured haggling generated the most theoretically valid estimates of WTP. The levels of WTP identified suggest that user fees exceeding 50 Naira per net re-treatment may discourage demand for the service. This is an important challenge for ITN programmes

Stated and actual altruistic willingness to pay for insecticide-treated nets in Nigeria: validity of open-ended and binary with follow-up questions.

OBJECTIVES: To determine whether the binary with follow-up (BWFU) or open-ended (OPED) contingent valuation question format would yield better valid estimates of altruistic willingness to pay (WTP) and examine the feasibility of using intra-community altruistic contributions to procure insecticide-treated nets (ITNs) for the poor in Nigeria. METHODS: Structured questionnaires were used to elicit stated altruistic WTP from a random sub-sample of respondents that had either the OPED or BWFU used to elicit WTP in Southeast Nigeria. One month after the survey the respondents were asked to redeem their WTP pledges. Construct validity was determined using econometric analyses, while phi correlation coefficient was used to determine criterion validity. FINDINGS: More than 57% of the respondents were hypothetically willing to pay for altruism in both BWFU and OPED groups. Altruistic WTP was positively related to respondents' WTP for own nets (p<0.01) and nets for other household members (p<0.05) in both groups. A total of 27.0% and 33.1% of the respondents with positive hypothetical WTP in the BWFU and OPED actually contributed. Phi correlation coefficient was 0.23 (95%CI 0.20-0.29) in BWFU and 0.49 (95%CI 0.44-0.54) in OPED. The money realised was used to buy some ITNs, which were presented to poor people selected by community leaders. CONCLUSION: The OPED elicited better valid estimates of altruistic WTP than BWFU. The potential for more capable people to contribute for the poor in ITNs programmes actually exist and malaria control programmes should explore altruistic contributions as a means to increase net coverage

Exploring the Use of Cost-Benefit Analysis to Compare Pharmaceutical Treatments for Menorrhagia

Background: The extra-welfarist theoretical framework tends to focus on health-related quality of life, whilst the welfarist framework captures a wider notion of well-being. EQ-5D and SF-6D are commonly used to value outcomes in chronic conditions with episodic symptoms, such as heavy menstrual bleeding (clinically termed menorrhagia). Because of their narrow-health focus and the condition’s periodic nature these measures may be unsuitable. A viable alternative measure is willingness to pay (WTP) from the welfarist framework. Objective: We explore the use of WTP in a preliminary cost-benefit analysis comparing pharmaceutical treatments for menorrhagia. Methods: A cost-benefit analysis was carried out based on an outcome of WTP. The analysis is based in the UK primary care setting over a 24-month time period, with a partial societal perspective. Ninety-nine women completed a WTP exercise from the ex-ante (pre-treatment/condition) perspective. Maximum average WTP values were elicited for two pharmaceutical treatments, levonorgestrel-releasing intrauterine system (LNG-IUS) and oral treatment. Cost data were offset against WTP and the net present value derived for treatment. Qualitative information explaining the WTP values was also collected. Results: Oral treatment was indicated to be the most cost-beneficial intervention costing £107 less than LNG-IUS and generating £7 more benefits. The mean incremental net present value for oral treatment compared with LNG-IUS was £113. The use of the WTP approach was acceptable as very few protests and non-responses were observed. Conclusion: The preliminary cost-benefit analysis results recommend oral treatment as the first-line treatment for menorrhagia. The WTP approach is a feasible alternative to the conventional EQ-5D/SF-6D approaches and offers advantages by capturing benefits beyond health, which is particularly relevant in menorrhagia

On the Use of Valuation Mechanisms to Measure Consumers' Willingness to Pay for Novel Products: A Comparison of Hypothetical and Non-Hypothetical Values

Willingness to pay (WTP) estimates for novel products are needed to assess consumers' valuation of these products as well as for product adoption and optimal pricing strategies. Using experiments in a retail setting, we compare hypothetical and non-hypothetical WTP values between a Becker-DeGroot-Marshak (BDM) auction mechanism and conjoint analysis. Our results suggest that the auction WTP values are higher than conjoint analysis WTP values. Moreover, the hypothetical WTP values are higher than the non-hypothetical WTP values in both elicitation mechanisms.Conjoint analysis, willingness-to-pay, auction, hypothetical, non-hypothetical, Consumer/Household Economics, Institutional and Behavioral Economics,

Willingness to pay for community-based health insurance in Nigeria: do economic status and place of residence matter?

OBJECTIVE: We examine socio-economic status (SES) and geographic differences in willingness of respondents to pay for community-based health insurance (CBHI). METHODS: The study took place in Anambra and Enugu states, south-east Nigeria. It involved a rural, an urban and a semi-urban community in each of the two states. A pre-tested interviewer-administered questionnaire was used to collect information from a total of 3070 households selected by simple random sampling. Contingent valuation was used to elicit willingness to pay (WTP) using the bidding game format. Data were examined for correlation between SES and geographic locations with WTP. Log ordinary least squares (OLS) was used to examine the construct validity of elicited WTP. RESULTS: Generally, less than 40% of the respondents were willing to pay for CBHI membership for themselves or other household members. The proportions of people who were willing to pay were much lower in the rural communities, at less than 7%. The average that respondents were willing to pay as a monthly premium for themselves ranged from 250 Naira (US$1.7) in a rural community to 343 Naira (US$2.9) in an urban community. The higher the SES group, the higher the stated WTP amount. Similarly, the urbanites stated higher WTP compared with peri-urban and rural dwellers. Males and people with more education stated higher WTP values than females and those with less education. Log OLS also showed that previously paying out-of-pocket for health care was negatively related to WTP. Previously paying for health care using any health insurance mechanism was positively related to WTP. CONCLUSION: Economic status and place of residence amongst other factors matter in peoples' WTP for CBHI membership. Consumer awareness has to be created about the benefits of CBHI, especially in rural areas, and the amount to be paid has to be augmented with other means of financing (e.g. government and/or donor subsidies) to ensure success and sustainability of CBHI schemes

Using nonparametrics to specify a model to measure the value of travel time

Using a range of nonparametric methods, the paper examines the specification of a model to evaluate the willingness-to-pay (WTP) for travel time changes from binomial choice data from a simple time-cost trading experiment. The analysis favours a model with random WTP as the only source of randomness over a model with fixed WTP which is linear in time and cost and has an additive random error term. Results further indicate that the distribution of log WTP can be described as a sum of a linear index fixing the location of the log WTP distribution and an independent random variable representing unobserved heterogeneity. This formulation is useful for parametric modelling. The index indicates that the WTP varies systematically with income and other individual characteristics. The WTP varies also with the time difference presented in the experiment which is in contradiction of standard utility theory.Willingness-to-pay; WTP; value of time; nonparametric; semiparametric; local logit

A new approach for analyzing multiple bounded WTP data - Certainty dependent payment card intervals

In this paper we analyze the multiple-bounded (MB) format in which uncertainty is directly incorporated into the WTP question. We introduce a new approach to estimate mean and median willingness to pay (WTP) using MB data by allowing respondents to expand their WTP intervals by shifting their upper bound. Thus, less certain respondents will state a wider WTP interval. This differs from the Welsh and Poe (1998) approach (WP) which shifts the entire WTP interval and likely overestimates mean and median WTP when uncertainty is introduced. To compare empirically our expansion approach to the WP-approach, we use survey data from 2004 that elicited WTP for implementation of a predator protection policy in Sweden. In addition to its more intuitive appeal, our results indicate that the interval expansion approach better fits the data and provides a smaller range of estimated WTP. It also with better precision estimates the mean and median WTP when preference uncertainty is considered, and its estimates are less sensitive to alternative distributional assumptions.contingent valuation; preference uncertainty; elicitation format; multiple-bounded; payment card; willingness to pay; predators

Do scenario context and question order influence WTP? The application of a model of uncertain WTP to the CV of the morbidity impacts of air pollution

This paper presents a general framework for modelling responses to contingent valuation questions when respondents are uncertain about their ‘true’ WTP. These models are applied to a contingent valuation data set recording respondents’ WTP to avoid episodes of ill-health. Two issues are addressed. First, whether the order in which a respondent answers a series of contingent valuation questions influences their WTP. Second, whether the context in which a good is valued (in this case the information the respondent is given concerning the cause of the ill-health episode or the policy put into place to avoid that episode) influences respondents’ WTP. The results of the modelling exercise suggest that neither valuation order nor the context included in the valuation scenario impact on the precision with which respondents answer the contingent valuation questions. Similarly, valuation order does not appear to influence the mean or median WTP of the sample. In contrast, it is shown that in some cases, the inclusion of richer context significantly shifts both the mean and median WTP of the sample. This result has implications for the application of benefits transfer. Since, WTP to avoid an episode of ill-health cannot be shown to be independent of the context in which it is valued, the validity of transferring benefits of avoided ill-health episodes from one policy context to another must be called into question

The endowment effect

The divergence between the willingness-to-pay (WTP) and willingness-to-accept (WTA) has resulted in two explanations. First, that this may be due to the manifestation of the endowment effect (Kahneman, Knetsch and Thaler, 1991). Second, the difference between WTA and WTP is directly related with the substitutability of the goods (Haneman, 1991). In this paper we show that one can observe undertrading in markets even if the WTA-WTP discrepancy is negligible. Due to underrevelation of intramarginal units very flat reported inverse supply and demand curves are obtained. As a result very small deviations in reported WTA and WTP can lead to undertrading

Beyond asking : exploring the use of automatic price evaluations to implicitly estimate consumers’ willingness-to-pay

Explicit consumers responses are often adverse for the validity of procedures used to estimate consumers' willingness-to-pay (WTP). This paper investigates if price evaluations occur automatically and to what extent these automatic processes can be used to implicitly estimate consumers' WTP. An adapted version of the task-rule congruency (TRC) paradigm was used in two studies. Results of the first study provided evidence for the notion that prices are automatically evaluated. However, the used procedure had limitations that restricted its utility as an implicit WTP estimate. The procedure was adjusted, and an additional study was conducted. The results of the second study also indicated that prices were evaluated automatically. Additionally, the procedure used during the second study allowed to explore to what extent the observed TRC effects could be used to implicitly estimate consumers' WTP. Taken together, these studies provided evidence for the notion that prices are evaluated automatically. Furthermore, the procedure has the potential to be further developed into an implicit estimate of consumers' WTP