Using Discrete Choice Experiments to Estimate the Marginal Willingness to Pay of Insurance Premium for the Cancer Treatments in Korea

Abstract

This study, using discrete choice experiments (DCE) method, tries to figure out the characteristics of the decision-making for cancer treatments and investigates the attributes affecting the respondents’ choice. Also it ascertains marginal willingness to pay (MWTP) and relative preferences for cancer treatments among the general population. The nested-logit model using full maximum likelihood allows us to estimate multi-levels of dependent variables. The empirical results show that the respondents are willing to pay more about 20.8% than they are paying now in order to increase their expected survival rate by 10 percentage points. The paper also considers the effect of several individual and socio-economic variables on the size of MWTP of insurance premium for increasing cancer survival rates. Most interestingly, the MWTP is shown to be monotonically decreasing as the people became old. We also found out that there exists severe discrepancy of estimates of MWTP of between payers and dependents and across different occupational groups.