Valuing pain using the subjective well-being method

• Published in: Economics and human biology 2020-05, Vol.37, p.100827-100827, Article 100827
• Main Authors: Ólafsdóttir, Thorhildur, Ásgeirsdóttir, Tinna Laufey, Norton, Edward C.
• Format: Article
• Language: English
• Subjects: Aged; Chronic Pain - economics; Chronic Pain - epidemiology; Compensating variation; Female; Humans; Income - statistics & numerical data; Male; Middle Aged; Pain; Pain Measurement; Personal Satisfaction; Subjective well-being method; Value; Willingness-To-Pay
• ISSN: 1570-677X; 1873-6130
• DOI: 10.1016/j.ehb.2019.100827

•Improved econometric methods provide new information on the value of pain.•We allow the trade-off between pain and income to vary across income ranges.•The willingness to pay for pain relief is in the range of 56–145 USD per day.•The monetary value of pain relief is lower than previously reported. Chronic pain clearly lowers utility, but valuing the reduction in utility is empirically challenging. Here, we use improvements over prior applications of the subjective well-being method to estimate the implied trade-off between pain and income using four waves of the Health and Retirement Study (2008-2014), a nationally representative survey on individuals age 50 and older. We model income with a flexible functional form, allowing the trade-off between pain and income to vary across income groups. We control for individual fixed effects in the life-satisfaction equations and instrument for income in some models. We find values for avoiding pain ranging between 56–145 USD per day. These results are lower than previously reported and suggest that the higher previous estimates may be heavily affected by the highest income level and confounded by endogeneity in the income variable. As expected, we find that the value of pain relief increases with pain severity.