Contingent valuation studies and health policy

I am glad to have the opportunity to respond to the fine paper by Professors Smith and Sach (2009). They raise both foundational questions concerning the justification of contingent valuation studies in the health policy area, and important implementation questions concerning the appropriate design of such studies. I will focus my attention on the question of justification. The debate about contingent valuation in health policy is part and parcel of the debate between those who favour cost–benefit analysis (CBA), and those who favour cost-effectiveness analysis (CEA) (Adler, 2006: 1–17). CBA values all well-being impacts, including health and longevity, in dollar terms, and aggregates. Technically, CBA evaluates policies by aggregating willingness-to-pay/willingnessto- accept amounts (WTPs). Standard techniques for estimating WTPs are twofold: revealed preference techniques, which estimate them based on market behaviour (such techniques have been widely used to estimate WTPs for fatality risk reduction, known as the ‘value of statistical life’); and survey techniques. ‘Contingent valuation’ is just the technical term for such survey techniques.