Willingness To Pay And Its Role In Health Economics
DOI:
https://doi.org/10.51985/JBUMDC2018120Abstract
A stated preference which refers to the valuation of benefits in monetary terms to the health-related commodities or services
are loosely termed as willingness to pay (WTP). Studies in health economics which are derived by surveys or experiments
have been conducted addressing this issue. However, most economists have the view that stated preference or willingness
to pay is an acceptable method if inclined with the aims of economic analysis. There has been a rapid growth of the health
industry in the last few decades to meet the healthcare needs of an ever-growing population of the world with varying
patterns of burden of disease and health related issues. This has escalated healthcare costs significantly putting pressure
on governments to allocate additional finances in the health sector. In developing nations and some developed countries
health services are mostly purchased privately as the governmental annual health budgets struggle to meet the healthcare
demand of the communities.
Its relevance is increased in countries where people are expected to contribute significantly towards the costs of healthcare.
Similarly, the strength of preference of health-related commodities is an important indicator for making prudent choices
in deciding between competing health program which may be publicly funded. Moreover, other advantages of using WTP
as outcome measure include; demand for information, process utility, option value and altruistic value. Demand for
information encompasses the utility gained by individuals from the information included in the WTP survey. To conclude
willingness to pay methodology is a useful tool in health economics to capture the preference of individuals who are the
direct beneficiaries of the proposed health services.
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