Valuing Pain Using the Subjective Well-Being Method

46 Pages Posted: 11 Aug 2017 Last revised: 13 Feb 2021

See all articles by Thorhildur Ólafsdóttir

Thorhildur Ólafsdóttir

University of Iceland

Tinna Laufey Ásgeirsdóttir

University of Iceland

Edward C. Norton

University of Michigan at Ann Arbor

Date Written: August 2017

Abstract

Chronic pain clearly lowers utility, but it is empirically challenging to estimate the monetary compensation needed to offset this utility reduction. We use the subjective well-being method to estimate the value of pain relief among individuals age 50 and older. We use a sample of 64,205 observations from 4 waves (2008-2014) of the Health and Retirement Study, a nationally representative individual-level survey data, permitting us to control for individual heterogeneity. Our models, which allow for nonlinear effects in income, show the value of avoiding pain ranging between 56 to 145 USD per day. These results are lower than previously reported, suggesting that the value of pain relief varies by income levels. Thus, previous estimates of the value of pain relief assuming constant monetary compensation for pain across income levels are heavily affected by the highest income level. Furthermore, we find that the value of pain relief increases with pain severity.

Suggested Citation

Ólafsdóttir, Thorhildur and Asgeirsdottir, Tinna Laufey and Norton, Edward C., Valuing Pain Using the Subjective Well-Being Method (August 2017). NBER Working Paper No. w23649, Available at SSRN: https://ssrn.com/abstract=3016919

Thorhildur Ólafsdóttir (Contact Author)

University of Iceland

Iceland

Tinna Laufey Asgeirsdottir

University of Iceland ( email )

Iceland
(354)8650821 (Phone)

HOME PAGE: http://www.asgeirsdottir.com

Edward C. Norton

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

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