CV (Contingent Valuation)

1. Description

CV (Contingent Valuation) is an SPM approach where stakeholders are asked about their willingness to pay (WTP) for a more beneficial option. Conversely, CV asks about willingness to accept compensation (WTAC) for a less beneficial option.[1][2][3]

2. Evaluation

2.1 Principle
  • Contingent valuation is theoretically sound, and it is derived from neoclassical welfare economics.
  • The results are limited and it is difficult to extend the results to other situations which may be similar, but vary specific attributes.
  • The choice behaviour elicited under hypothetical circumstances may not truly reflect stakeholder behaviour in real life situations.
  • It is known to be affected by stakeholder or consumer responses - either oversensitive if the hypothetical changes affect them, or under-sensitive if they feel that the changes will not affect them.
  • It is also very important to note that some stakeholders may morally object to assigning monetary values on treatments and medicines.
  • Protest bidders have been known place a value of 0 if they ethically disagree with the principles of CV.
  • Contingent valuation explicitly incorporates stakeholder values via the level of WTP or WTAC they specify.
  • If a stakeholder values a scenario high, then the corresponding WTP will also be high.
  • It is possible to create hypothetical descriptions of multiple scenarios and then compare WTP or WTAC.

2.2 Features
  • The description of the scenario is flexible and easily adaptable to accommodate the purpose.
  • It may include different numbers of benefits and risks which have the potential to vary over time.
  • It can include numerical and/or visual representations from multiple sources of evidence.

2.3 Visualisation
  • There is no standard method of visualisation.

2.4 Assessability and accessibility
  • The results are easily interpretable.
  • Some statistical knowledge is required to calculate and interpret the mean and median values with standard deviations and confidence intervals.
  • If other confounders (e.g. demographics or socio-economic status) are to be investigated, then some statistical knowledge is essential.
  • CV may not be practical when questioning stakeholders or consumers in a risk-benefit decision-making because some treatments may be free and/or subsidised, so selecting a WTP or WTAC may seem like an abstract and difficult concept.

3. References

[1] Smith RD. Construction of the contingent valuation market in health care: a critical assessment. Health Econ 2003;12(8):609-28.
[2] Mitchell RC, Carson RT. Using surveys to value public goods: the contingent valuation method. Washington, D.C.: The Johns Hopkins University Press; 2005.
[3] Havet N, Morelle M, Remonnay R, Carrere MO. Cancer patients' willingness to pay for blood transfusions at home: results from a contingent valuation study in a French cancer network. The European Journal of Health Economics 2011 Jun 10;1-12.