HERU Seminar - Professor Dorte Gyrd-Hansen

HERU Seminar - Professor Dorte Gyrd-Hansen
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This is a past event

The second HERU seminar this session from a member of COHERE staff is from Professor Dorte Gyrd-Hansen, Head of COHERE - Center for Health Economic Research, Department of Business and Economics, University of Southern Denmark, Odense.

The seminar will take place from 12pm to 1pm in Room 1:029, Polwarth Building, Foresterhill.

Title: A stated preference approach to assess whether health status impacts on the marginal utility of consumption.

Abstract: An often, but not widely appreciated assumption underlying theoretical predictions of optimal insurance is that marginal utility of consumption evaluated at any given income level remains constant whether the individual is well or ill. However, if utility of consumption is increased or decreased by ill health, this will have an effect on the theoretical predictions of optimal choice of health insurance. In addition to the question of optimal insurance, the issue of state dependence also relates to the validity of asking patients (and not citizens) for their valuations of health improvements in stated preference studies when these are to guide the resource allocation of communal funds. To the extent that patients are in poor health and there is significant negative or positive state dependence, the marginal utility of income will not be equivalent to that of the average taxpayer, and thus, derivation of societal net benefits will be biased. Moreover, negative state dependence could be used as a justification for transferring resources from non-healthy/disabled to health individuals. Hence, the presence of state dependence has methodological as well as policy relevance. Despite the importance of the subject, very few studies have been conducted. These studies show contradictory evidence. The approach presented in this paper mimics a simple insurance market, where individuals can self-insure across two periods of time (one in which the person is in good health and one in which the person is in poorer health). The health states are presented as certain events, thus eliminating any problems associated with cognition and probabilities. The focus of this study is not to derive an estimate of state dependence, but to determine whether or not individuals exhibit positive or negative state dependence when confronted with a short term reduction in health and to qualify whether the severity of a given health state affects the sign of state dependence.

Other HERU seminars are featured on the HERU External Seminars page.

Hosted by
Professor Mandy Ryan
Venue
Polwarth Building, Rm 1:029