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Related Experiment Videos

Conjoint analysis. The cost variable: an Achilles' heel?

Ulla Slothuus Skjoldborg1, Dorte Gyrd-Hansen

  • 1Institute of Public Health, University of Southern Denmark-Main Campus: Odense, Denmark. usl@sam.sdu.dk

Health Economics
|May 22, 2003
PubMed
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Interpreting willingness-to-pay (WTP) values from conjoint analysis requires caution. Including cost variables and payment utility can significantly alter WTP estimates, necessitating careful model specification.

Area of Science:

  • Health Economics
  • Behavioral Economics
  • Econometrics

Background:

  • Conjoint analysis is widely used to estimate willingness-to-pay (WTP).
  • Accurate estimation of WTP is crucial for healthcare policy and resource allocation.
  • Potential complexities in incorporating cost variables are often underestimated.

Purpose of the Study:

  • To investigate the impact of cost variable inclusion on WTP estimates in conjoint analysis.
  • To highlight potential pitfalls in interpreting implicit WTP values.
  • To explore the effect of payment utility on model parameters.

Main Methods:

  • Utilized a large dataset from a Danish study (1991 interviews).
  • Employed discrete choice tasks for hospital and healthcare system choices.

Related Experiment Videos

  • Performed model comparisons varying cost ranges and including a payment utility dummy variable.

    • Main Results:

    • Wider cost ranges led to lower payment variable weights and increased WTP.
    • Including a payment utility dummy significantly affected other model variables, causing some to become insignificant or change sign.
    • Model results indicate potential for erroneous conclusions without careful cost-utility relationship modeling.

    Conclusions:

    • Interpretation of implicit WTP values derived from conjoint analysis demands caution.
    • The inclusion of cost variables and payment utility significantly influences WTP estimates.
    • A two-dimensional approach to model cost-utility relationships is recommended to avoid erroneous conclusions and refine WTP estimates.