Health-related externalities: Evidence from a choice experiment

Health-related external benefits are of potentially large importance for public policy. This paper investigates health-related external benefits using a stated-preference discrete-choice experiment framed in a health care context and including choice scenarios defined by six attributes related to a recipient and the recipient's condition: communicability, severity, medical necessity, relationship to respondent, location, and amount of contribution requested. Subjects also completed a set of own-treatment scenarios and a values-orientation instrument. We find evidence of substantial health-related external benefits that vary as expected with the scenario attributes and subjects' value orientations. The results are consistent with a number of hypotheses offered by the general theoretical analysis of health-related externalities and the analysis of externalities specific to health care.