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Non-market resource allocation and the public’s interpretation of need: an empirical investigation in the context of health care

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Abstract

The concept of need is central to the non-market allocation of many public resources, although the definition of need to serve as a basis for such resource allocation often remains contested. This study uses a discrete-choice experiment to investigate the general public’s interpretation of need in the context of health care resource allocation, focusing on three commonly cited definitions of need: need as a person’s baseline health status; need as a person’s ability-to-benefit; and need as the amount of resources required to exhaust a person’s ability-to-benefit. Analysis of participants’ need judgments using a latent-class, rank-ordered conditional logit model reveals that most individuals draw on all three definitions when assessing need, and that here is heterogeneity in interpretations of need among the public. Baseline health status is the most influential and consistent determinant of need, while ability-to-benefit and resources-required-to-exhaust-benefit are considered jointly. However, while some assign greater need to those who are worse off in the sense that they have little ability-to-benefit and require large amounts of resources to achieve that benefit, others assign greater need to those who have greater ability-to-benefit and whose benefit can be achieved with small amounts of resources. The public’s reasoning about need contrasts sharply in a number of ways with the types of arguments offered in the literature on needs-based resource allocation.

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Fig. 1
Fig. 2

Notes Reference combination: (pain free \(=\) 0, pain relief \(=\) 24 and pills \(=\) 12). All probabilities are conditional on class

Fig. 3

Notes Reference combination: (pain free \(=\) 0, pain relief \(=\) 24 and pills \(=\) 12). All probabilities are conditional on class

Fig. 4

Notes Reference combination: (pain free \(=\) 0, pain relief \(=\) 24 and pills \(=\) 12). All probabilities are conditional on class

Fig. 5

Notes Reference combination: (pain free \(=\) 0, pain relief \(=\) 24 and pills \(=\) 12). All probabilities are conditional on class

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Notes

  1. Nuances, of course, do arise. The resources required to address a housing need for a physically disabled individual differ from an able-bodied individual. But because these claims pertain to shared, basic material human needs relative to a common material standard within a society the material resources required and their effectiveness are, except for unusual circumstances, similar across individuals. Further, such measures abstract from preferences—a homeless person may prefer to not live in a traditional dwelling—but these preferences do not alter the assessed need for housing.

  2. In our setting, participants are first asked who has the greatest need, so the choice set for this decision is all three alternatives; they are then asked who has the least need, so the choice set for this decision is the two remaining alternatives.

  3. Estimation is performed using both the ML and EM algorithms.

  4. Of those classified as inconsistent, only 10% missed both; 90% missed only a single test question.

  5. Results for the full sample and for models with interaction terms are listed in on-line Appendices 3 and 4.

  6. All probabilities are conditional probabilities, i.e., conditional on falling into the noted class.

  7. Results for class 4 in the full sample differ slightly: the gradient for baseline health is similarly shallow and the effects for ATB and RREB modest, but there is a modest negative relationship between need and ATB and a positive relationship between need and RREB. Such differences associated with the inclusion of inconsistent individuals suggests that the shallow gradient for baseline health is the key distinguishing characteristic of Class 4.

  8. Tests for independence (based on Spearman’s rank correlation and Kendall’s Tau statistic) between the levels of these attributes specified in the survey scenarios failed to reject the null hypothesis of independence (p \(=\) 0.41 and 0.43 respectively).

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Authors and Affiliations

  1. Department of Economics, KTH 132, McMaster University, 1280 Main Street West, Hamilton, ON, L8S 4M4, Canada

    Jeremiah Hurley & Michel Grignon

  2. Centre for Health Economics and Policy Analysis, McMaster University, Hamilton, Canada

    Jeremiah Hurley, Mita Giacomini, Deirdre DeJean & Michel Grignon

  3. Department of Economics, University of Southampton, Southampton, UK

    Emmanouil Mentzakis

  4. Department of Health Research Methods, Evidence and Impact, McMaster University, Hamilton, Canada

    Mita Giacomini & Deirdre DeJean

  5. Department of Health, Aging and Society, McMaster University, Hamilton, Canada

    Michel Grignon

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  1. Jeremiah Hurley
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  2. Emmanouil Mentzakis
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Correspondence to Jeremiah Hurley.

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Additional information

This research was funded by grant # 76670 from the Canadian Institutes of Health Research and by grant #2045 from the Government of Ontario through the Ministry of Health and Long-Term Care Health System Research Fund. The views expressed in this paper are those of the authors and should not be taken to represent the views of the Government of Ontario. We thank Neil Buckley, Anthony Culyer, Kate Cuff, Stuart Mestelman, Andrew Muller, and Jingjing Zhang and two anonymous referees for helpful comments, and Dave Cameron and Aleksandra Gajic for excellent research assistance. Any errors are our own.

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Hurley, J., Mentzakis, E., Giacomini, M. et al. Non-market resource allocation and the public’s interpretation of need: an empirical investigation in the context of health care. Soc Choice Welf 49, 117–143 (2017). https://doi.org/10.1007/s00355-017-1053-9

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