Contingent Valuation

Why the Interest?

Interest in CV reflects dissatisfaction with other outcome measures, especially quality-adjusted life years (QALYs), in two principal respects. First, QALYs are based on preferences for health outcomes only, whereas CV imposes no restriction on which attributes of a program generate value, encompassing (a) health outcomes, including health state, duration, and probability; (b) other attributes, related to the process of care; (c) maintaining the good as an option for future consumption rather than for current consumption (option value); and (d) obtaining satisfaction from others, in addition to or rather than oneself consuming the good (externalities). Second, CV values benefits in the same unit as costs. This is required to assess whether the good represents an overall benefit in absolute terms (allocative efficiency), rather than a benefit relative to another option (technical efficiency). However, the reality is that few CV studies achieve these advantages in practice. Most studies use current patients, so they tend to capture only health outcomes, and few studies use their results to perform a cost-benefit analysis. The theoretical superiority of CV is thus seldom realized in practice.

How Has Contingent Valuation Developed?

CV has been used extensively in transport and environmental economics since the 1960s. It was first applied to healthcare in the mid-1970s, but only a handful of studies were completed before the late 1980s. The development of CV in health economics was led by researchers in the United [Page 203]States, the United Kingdom, Canada, and Sweden, largely focused on cardiovascular disease. Since 2000, CV studies have been conducted in 35 countries, covering a vast range of diseases and interventions, although the single largest number of applications has been for pharmaceutical interventions (33%). However, CV studies remain rare, with only 265 studies published (as of December 31, 2005) compared with more than 35,000 other forms of economic evaluation on the OHE Health Economic Evaluation database.

Why So Few Studies?

Contingent valuation studies are incredibly complex, difficult, time-consuming, and costly to do well. This is because such studies face a number of methodological issues, for instance, framing effects (how the scenario is described), scale or scope biases (where WTP values are insensitive to the size or range of benefits described), payment vehicle and mode effects (where WTP values are affected by the payment method, e.g., taxation, out-of-pocket payment, or insurance) and payment frequency (e.g., weekly, monthly, or annually), and question order effects (where question order can affect results). These issues can be dealt with through adequate specification and administration of the market so that incentives to answer honestly are maximized. However, the issue of hypothetical bias, where respondents who do not actually have to part with money may state unrealistic valuations, may still be an issue even in a well-designed study since few opportunities exist to test this in practice in healthcare.

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