Stated preferences and numerical ability: Implications for public policy analysis
(Job Market Paper)
Abstract: Stated preference surveys that assess the value of goods and services inform regulation and broader policy implementation related to public health, the environment, and many other domains. This paper examines how estimates of willingness to pay (WTP) derived from stated preference surveys are influenced by respondents’ numerical ability. Using experimental data from over 10,000 people, I show that WTP estimates are often insensitive to the magnitude of benefits and that this insensitivity is largely explained by respondents' numerical ability. Difficulty understanding numerical information leads to context-specific biases, at times overstating WTP by more than 40%. Bias is generally larger among socioeconomic groups with low education and income levels. These results indicate that WTP elicitations often misrepresent people’s preferences and can confound preference estimation across socioeconomic groups. I provide a set of assumptions and methods that practitioners can use to statistically correct for bias to improve the consistency and representativeness of WTP estimates.
Behavioral science and noncommunicable diseases in low- and middle-income countries (With Nikkil Sudharsanan and Margaret McConnell)
In: Bloom DE, Sousa-Poza A, Sunde U, Routledge Handbook on the Economics of Ageing. Routledge; 2023.
Abstract: Rapid population ageing has made chronic noncommunicable diseases (NCDs) the leading cause of illness and death in many low- and middle-income countries (LMICs). Despite the growing importance of NCDs, most individuals with NCDs are either undiagnosed or diagnosed but ineffectively managed. In this chapter, we frame poor NCD management from the perspective of both clinicians and patients and explore the ways that behavioral science can inform solutions to improve the management of NCDs in LMICs. We first outline how differences in the clinical presentation and treatment approaches between NCDs and infectious conditions may create behavioral challenges that negatively impact the quality of NCD care provided by clinicians and the preventive health actions required by patients to manage NCDs. We describe several behavioral biases and systems-level barriers that clinicians and patients face in effectively managing NCDs, with a focus on mental models, heuristics, habits, and health-systems frictions. We then survey interventions that target these barriers, summarizing current evidence of their effectiveness. We conclude by discussing critical gaps in knowledge and opportunities for leveraging behavioral science approaches to improve NCD outcomes in LMICs.
The benefits and costs of U.S. employer COVID-19 vaccine mandates (With Maddalena Ferranna, Lisa Robinson, Daniel Cadarette, and David Bloom)
Risk Analysis 2023; 43(10): 2053-2068.
(Best Paper Award, Society for Risk Analysis)
Abstract: In 2021, the Biden Administration issued mandates requiring COVID-19 vaccinations for U.S. federal employees and contractors and for some healthcare and private sector workers. These mandates have been challenged in court; some have been halted or delayed. However, their costs and benefits have not been rigorously appraised. This study helps fill that gap. We estimate the direct costs and health-related benefits that would have accrued if these vaccination requirements had been implemented as intended. Compared with the January 2022 vaccination rates, we find that the mandates could have led to 15 million additional vaccinated individuals, increasing the overall proportion of the fully vaccinated U.S. population from 64% to 68%. The associated net benefits depend on the subsequent evolution of the pandemic—information unavailable ex ante to analysts or policymakers. In scenarios involving the emergence of a novel, more transmissible variant, against which vaccination and previous infection offer moderate protection, the estimated net benefits are potentially large. They reach almost $20,000 per additional vaccinated individual, with more than 20,000 total deaths averted over the 6-month period assessed. In scenarios involving a fading pandemic, existing vaccination-acquired or infection-acquired immunity provides sufficient protection, and the mandates’ benefits are unlikely to exceed their costs. Thus, mandates may be most useful when the consequences of inaction are catastrophic. However, we do not compare the effects of mandates with alternative policies for increasing vaccination rates or for promoting other protective measures, which may receive stronger public support and be less likely to be overturned by litigation.
Valuing COVID-19 morbidity risk reductions (With Lisa Robinson and James Hammitt)
Journal of Benefit-Cost Analysis 2022; 13(2): 247-268.
Abstract: Many economic analyses, including those that address the COVID-19 pandemic, focus on the value of averting deaths and do not include the value of averting nonfatal illnesses. Yet, incorporating the value of averting nonfatal cases may change conclusions about the desirability of the policy. While per case values may be small, the number of nonfatal cases is often large, far outstripping the number of fatal cases. The value of averting nonfatal cases is also increasingly important in evaluating COVID-19 policy options as vaccine- and infection-related immunity and treatments reduce the case-fatality rate. Unfortunately, little valuation research is available that explicitly addresses COVID-19 morbidity. We describe and implement an approach for approximating the value of averting nonfatal illnesses or injuries and apply it to COVID-19 in the USA. We estimate gains from averting COVID-19 morbidity of about 0.01 quality-adjusted life year (QALY) per mild case averted, 0.02 QALY per severe case, and 3.15 QALYs per critical case. These gains translate into monetary values of about $5300 per mild case, $11,000 per severe case, and $1.8 million per critical case. While these estimates are imprecise, they suggest the magnitude of the effects.
The modest effects of fact boxes on cancer screening (With Cass Sunstein, James Hammitt, and Jennifer Yeh)
Journal of Risk and Uncertainty 2021; 62(1): 29-54.
Abstract: As health care becomes increasingly personalized to the needs and values of individual patients, informational interventions that aim to inform and debias consumer decision-making are likely to become important tools. In a randomized controlled experiment, we explore the effects of providing participants with published fact boxes on the benefits and harms of common cancer screening procedures. Female participants were surveyed about breast cancer screening by mammography, while male participants were surveyed about prostate cancer screening by prostate-specific antigen (PSA) testing. For these screening procedures, we expect consumers to have overly optimistic prior beliefs about the benefits and harms. We find that participants update their beliefs about the net benefits of screening modestly, but we observe little change in their stated preferences to seek screening. Participants who scored higher on a numeracy test updated their beliefs about screening benefits more in response to the fact boxes than did participants who scored lower on the numeracy test.
Clinical evidence inputs to comparative effectiveness research could impact the development of novel treatments (With Dana Goldman, Darius Lakdawalla, Tomas Philipson, Daryl Pritchard, Marco Huesch, Nicholas Summers, Mark Linthicum, Jeff Sullivan, and Robert Dubois)
Journal of Comparative Effectiveness Research 2015; 4(3).
Abstract: This study aims to analyze the impacts of a range of clinical evidence generation scenarios associated with comparative effectiveness research (CER) on pharmaceutical innovation. We used the Global Pharmaceutical Policy Model to project the effect of changes in pharmaceutical producer costs, revenues and timings on drug innovation and health for the age 55+ populations in the USA and Europe through year 2060 using three clinical scenarios. Changes in producer incentives from widespread CER evidence generation and use had varied but often large predicted impacts on simulated outcomes in 2060. Effect on the number of new drug introductions ranged from a 81.1% reduction to a 45.5% increase, and the effect on population-level life expectancy ranged from a 15.6% reduction to a 11.4% increase compared to baseline estimates. The uncertainty surrounding the consequences of increased clinical evidence generation and use on innovation calls for a carefully measured approach to CER implementation, balancing near-term benefits to spending and health with long-term implications for innovation.
Measuring the value of better diabetes management (With Darius Lakdawalla, Felicia Forma, Jeffrey Sullivan, Pierre-Carl Michaud, Lily Bradley, and Dana Goldman)
American Journal of Managed Care 2013; 19(2): E11.
Abstract: The growing burden of type 2 diabetes mellitus has outpaced the modest progress in the efficacy of diabetes medications. However, it is unclear whether we are using our existing medications optimally. This article quantifies the value of addressing underuse of existing diabetes medications in the United States. Interventions—new technologies, public policies, or clinical approaches—that double the rate of initiation of insulin generate a value on average of more than $15,000 over the lifetime of a patient developing diabetes between ages 51 and 60 years, or $12.6 billion in the aggregate. Interventions that improve adherence would generate a value of more than $13,000 on average for the same patients, or $10.7 billion in the aggregate. The value of such interventions is on par with highly optimistic projections of technological progress in medication efficacy.
The large social value from use of statins warrants steps to improve adherence and broaden treatment (With David Grabowski, Darius Lakdawalla, Dana Goldman, Larry Liu, Tamer Abdelgawad, Andreas Kuznik, Michael Chernew, and Tomas Philipson)
Health Affairs 2012; 31(10): 2276-2285.
Abstract: Statins are considered a clinically important breakthrough for the treatment of cardiovascular disease. However, their social value at the US population level has not previously been studied. From an economic perspective, social value measures the quantity of resources—in monetary terms—that society would be willing to give up in order to retain the survival gains resulting from statin therapy. Using combined population and clinical data, this article calculates statins’ social value to consumers, or the value of survival benefits above actual payments for the drug, and to producers, or drug revenues, for the period 1987–2008. National survey data suggest that statin therapy reduced low-density lipoprotein levels by 18.8 percent, which translated into roughly 40,000 fewer deaths, 60,000 fewer hospitalizations for heart attacks, and 22,000 fewer hospitalizations for strokes in 2008. For people starting statin therapy in 1987–2008, consumers captured $947.4 billion (76 percent) of the total social value of the survival gains. Even greater consumer benefits could be achieved in the future if statins were prescribed in full compliance with cholesterol guidelines and patients adhered to prescribed regimens. In addition, statin costs are declining because of patent expirations. Policy makers should consider interventions at the patient and provider levels to encourage both therapy for untreated patients with high cholesterol and greater adherence after therapy is initiated.
An analysis of whether higher health care spending in the US versus Europe is ‘worth it’ in the case of cancer (With Tomas Philipson, Darius Lakdawalla, Mitra Corral, Rena Conti, and Dana Goldman)
Health Affairs 2012; 31(4): 667-675.
Abstract: Some observers argue that the US spends more on health care than other developed countries, but does not get enough in return. We study whether higher US cancer costs, compared to the EU, are “worth it” based on differences in the survival of cancer patients. We find that the US has achieved greater survival gains for cancer patients, and that – even net of higher US cost growth – this generated $556bn of additional value for US patients diagnosed between 1983 and 1999, compared to their European counterparts. This corresponds to 78 percent of overall cancer spending or $57,000 per patient.
Clinical and economic outcomes attributable to health care–associated sepsis and pneumonia.
Archives of Internal Medicine [now JAMA Internal Medicine] 2010; 170(4): 347-353. (With Ramanan Laxminarayan, Eli Perencevich, and Anup Malani)
Abstract: Background Health care–associated infections affect 1.7 million hospitalizations each year, but the clinical and economic costs attributable to these infections are poorly understood. Reliable estimates of these costs are needed to efficiently target limited resources for the greatest public health benefit. Methods Hospital discharge records from the Nationwide Inpatient Sample database were used to identify sepsis and pneumonia cases among 69 million discharges from hospitals in 40 US states between 1998 and 2006. Community-acquired infections were excluded using criteria adapted from previous studies. Because these criteria may not exclude all community-acquired infections, outcomes were examined separately for cases associated with invasive procedures, which were unlikely to result from preexisting infections. Attributable hospital length of stay, hospital costs, and crude in-hospital mortality were estimated from discharge records using a multivariate matching analysis and a supplementary regression analysis. These models controlled for patient diagnoses, procedures, comorbidities, demographics, and length of stay before infection. Results In cases associated with invasive surgery, attributable mean length of stay was 10.9 days, costs were $32 900, and mortality was 19.5% for sepsis; corresponding values for pneumonia were 14.0 days, $46 400, and 11.4%, respectively (P < .001). In cases not associated with invasive surgery, attributable mean length of stay, costs, and mortality were estimated to be 1.9 to 6.0 days, $5800 to $12 700, and 11.7% to 16.0% for sepsis and 3.7 to 9.7 days, $11 100 to $22 300, and 4.6% to 10.3% for pneumonia (P < .001). Conclusion Health care–associated sepsis and pneumonia impose substantial clinical and economic costs.