In the case of a commodity that is traded in the market, buyers and sellers reveal their preferences directly through their actions. Since health basically is a private good, one expects to be able to use market data to assess the value of health changes. However, in many countries, the government intervenes in the market or even runs the health care sector. Often, the price paid for a treatment is zero or fixed at an arbitrary level which is kept constant over long intervals of time. This makes it difficult to use econometrics to estimate demand curves. There is the further complication that risk plays a central role within the health field.

This raises the question of how to overcome the problem of preference revelation. Several different practical methods which can be used to measure the WTP for health services have been suggested in the literature. This chapter presents the three most frequently used and/or suggested methods: survey techniques, the human capital approach, and indirect methods using market data. The chapter also offers an overview of empirical studies using different methods to assess the value of health changes. The reader is also referred to chapter 9, where methods such as standard gambles, time trade-offs, risk–risk trade-offs and risk–dollar trade-offs are presented.

The contingent valuation method

The contingent valuation method (CVM) is the modern name for the survey method (since the answers to a valuation question are contingent upon the particular hypothetical market described to the respondents).