BOOKS OF RtfiDIfGS - PAHO/WHO

1 Klarman
Intargibl Benefits
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Pain, discomfort, and grief are among the costs of illness currently borne, which
constitute the intangible benefits of a program of health services that averts them. The
benefits accrue partly to the patients and partly to their friends, relatives, and society at
large, to the extent that we. take pleasure in the happiness of others. That positive
externai effects in consumption exist is indicated by personal and philanthropic gifts. to
the extent that they are not subsidized by the deductibility provisions of the income
tax (59). Looming even larger is the averted premature loss of human life. Since none of
these effects is traded on the market, none carries a price tag. In attempting to put a value
on averting them the question arises: what would one be willing to pay to avoid them?
In my paper on syphilis (45), 1 estimated willingness to pay for escaping the early and
late manifestations of the disease by examining expenditures incurred in connection with
other diseases that met certain conditions. After consultation with clinicians 1 adopted
psoriasis as the analogue for early syphilis, and terminal cancer as the analogue for its late
stage. The conditions specified were that the expenditures for medical care represented
principally a willingness to pay for freedom from the particular disease, since in neither
case could direct or indirect tangible benefits, as defined above, be realized. To the extent
that payments were made only by the patient (directly or through health insurance),
willingness to pay by others was neglected and total willingness to pay was understated.
Neenan (60) has estimated the consumer benefit of a community chest x-ray program
for tuberculosis. With the help of some fee data indicating willingness to pay, he obtained
very high estimates of value.
Several years have elapsed since intangible benefits were valued. The analogous diseases
approach has not been repeated; this suggests that neither the estimates themselves nor
the procedures for obtaining them have been found useful. One reason is obvious: the
approach is specific, calling for the development of estimates, disease by disease.
A larger body of literature is devoted to the value of human itfe than to the other
types of intangible health benefit. Life insurance holdings are clearly not applicable to
bachelors and jury verdicts are inconsistent (13, p. 37). The implications of public policy
decisions or govemmental spending are difficult to elicit in the absence of information on
the alternatives that faced the decision makers (19). Moreover, such valuation may lack
stability and consistency (24, pp. 133-134).
Schelling(61) has proposed a different approach. He would measure the value of
human life, as distinguished from livelihood, by the arnount people are willing to spend to
buy a specified reduction in the statistical probability of death. Acton (24, p. 258)
applied this approach, and derived an estimate of the value of human life at $28,000. This
amount serves as a substitute for the net value of lost earnings and is not an additional
sum.
I am not sanguine about the applicability of Acton's numerical estimate to the
evaluation of program alternatives. Acton was the first to criticize the defects in his
estimate, including the small size of his sample, and its apparent biases. While these
defects can be remedied in the future, what troubles me is the likelihood that respondents
to this type of question may not grasp its meaning. Do respondents know the actual
probabilities of their dying in the coming year? How is a small-e.g. 1 per cent-reduction
in statistical probability perceived? How much more is a 10 per cent reduction worth
than a 1 per cent reduction? Is it plausible to postulate a strictly linear relationship