Measuring Willingness-To-Pay for Risk Reduction: An Application of Conjoint Analysis

This study applies conjoint analysis (CA) to estimate the marginal willingness-to-pay (MWTP) of elderly individuals for a reduction of the risk of fracture of the femur. The good in question are hypothetical hip protectors which lower the risk of a fracture by different amounts. Other attributes are ease of handling, wearing comfort, and out-of-pocket cost. Thus, the novelty of the present work lies in its letting risk reduction be traded off against several attributes. In 500 face-to-face interviews, pensioners stated whether or not they would buy the product. Results suggest that MWTP for wearing comfort exceeds that for risk reduction. Indeed, willingness- to-pay for the product as a whole is negative, indicating that it should not be included as a mandatory benefit in health insurance.