The Revealed Preference Approach
If the costs of implementing health care programmes are to be compared directly with health benefits, it is necessary to express health consequences in monetary units. This chapter and the following chapter examine the empirical methods that economists have devised to quantify how much citizens are willing to pay in monetary terms for health effects. There are two principal approaches that can be used to obtain willingness-to-pay estimates of health changes: revealed preference as observed in actual choices or expressed preference as observed in hypothetical choices in surveys. This chapter is devoted to the revealed preference approach and the following chapter is devoted to the expressed preference approach.
KeywordsWage Rate Statistical Life Wage Premium Smoke Detector Indoor Radon Concentration
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