Abstract
An important area of inquiry for economists is understanding individuals’ willingness to sacrifice current consumption of goods and services for a change in some non-market good (e.g., improvement in the environment or health), and especially how results may vary across diverse subgroups and populations. This study explores racial and ethnic disparities in willingness to pay (WTP) for improved health among an aging population sample, while also examining the impact of health status and risky health behaviors. Using contingent valuation survey data from the Health and Retirement Study (HRS) and a Heckman two-step modeling technique to correct for selection effects, findings reveal racial and ethnic disparities in absolute mean WTP but not relative mean WTP. Although minorities are more likely to have a positive WTP, they are not willing to pay increasing absolute dollar amounts for improved health. However, when compared with non-Hispanic Whites, minorities’ annual mean WTP is an higher percentage of their annual household income. In addition, while risky health behaviors do not affect WTP valuations, current morbidity affects whether or not an individual will have a positive WTP for improved health.
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Notes
- 1.
The lifetime diagnosis question of “have you ever…?” of these chronic illnesses is used. While not available in the HRS data, the current diagnosis “do you currently…” of the chronic illnesses would be preferable given that health status of some respondents previously diagnosed with illnesses may have improved with consistent usage of prescribed treatments and drugs.
- 2.
Income includes before-tax income from earnings, unemployment, Social Security and public benefits, retirement income, interests and dividends, child support and income from other sources, with exception of non-cash benefits (e.g., food stamps).
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Odufuwa, O., Berrens, R., Valdez, R. (2015). Racial and Ethnic Disparities in Willingness to Pay for Improved Health: Evidence from the Aging Population. In: Vega, W., Markides, K., Angel, J., Torres-Gil, F. (eds) Challenges of Latino Aging in the Americas. Springer, Cham. https://doi.org/10.1007/978-3-319-12598-5_20
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