Developing Income Growth Adjustment Factors

Adjusting WTP to reflect growth in real income requires three steps:

1. Identify relevant income elasticity estimates from the peer-reviewed literature

2. Calculate changes in future income

3. Calculate adjustments to WTP based on changes in future income and income

elasticity estimates

1. Identifying income elasticity estimates

Income elasticity estimates relate changes in demand for goods to changes in income. Positive

income elasticity suggests that as income rises, demand for the good also rises. Negative income

elasticity suggests that as income rises, demand for the good falls. BenMAP does not adjust

Cost-of-Illness (COI) estimates according to changes in income elasticity due to the fact that

COI estimates the direct cost of a health outcome; instead we adjust this metric using inflation

factors described above. BenMAP includes income elasticity estimates specific to the type of

health endpoint associated with the WTP estimate. BenMAP contains elasticity estimates for

three types of health effects: minor, severe and premature mortality. Minor health effects are

those of short duration. Severe, or chronic, health effects are of longer duration. Consistent with

economic theory, the peer reviewed literature indicates that income elasticity varies according to

the severity of the health effect. Below we summarize the health endpoints considered minor and

severe within BenMAP.

 

 

n301 - n302 - n303 - n304 - n305 - n306 - n307 - n308 - n309 - n310 - n311 - n312 - n313 - n314 - n315 - n316 - n317 - n318 - n319 - n320 - n321 - n322 - n323 - n324 - n325 - n326 - n327 - n328 - n329 - n330 - n331 - n332 - n333 - n334 - n335 - n336 - n337 - n338 - n339 - n340 - n341 - n342 - n343 - n344 - n345 - n346 - n347 - n348 - n349 - n350

 

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