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Valuing Reductions in Environmental Sources of Infertility Risk Using the Efficient Household Framework

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There is an increasing body evidence suggesting that a broad range of pollutants have the potential to alter human endocrine systems. One disturbing consequence of exposures to these endocrine disruptors is that they may significantly increase the incidence of infertility in exposed populations. The purpose of this research is to develop and evaluate a methodology for assessing the magnitude of human values associated with reducing infertility risks from environmental sources. Most previous research in health and environmental valuation has focused on individual decisions; however, infertility risks clearly present a context where the household (i.e., the couple) is the relevant decision making unit. This research will develop and refine a conceptual framework for linking collective (household) decisions to the preferences of the individual members. It will provide a conceptual basis for deriving how measures of economic welfare based on households' observed or stated decisions relate to the preferences of the individual adult members living in that household. A series of focus groups will be conducted to evaluate hypotheses from the conceptual model and to explore couples' perceptions and attitudes regarding infertility risks and their joint decision processes for addressing infertility problems. One set of focus groups will be conducted with couples who wish to have children but have not yet resolved their fertility status. This will provide an ex ante perspective on couples' perceptions regarding the risks and implications of experiencing infertility. Participants will also be asked to evaluate proposed intervention programs or plans for reducing the risks of infertility. A second set of focus groups will be conducted with couples who are currently undergoing infertility treatment in order to examine how their expectations changed through their experiences, how the views on infertility differed within couples, and how they arrived at joint decisions regarding remedial expenditures and procedures. The focus groups will provide qualitative empirical support for the development of the conceptual model. They will also provide an important foundation for future applied research examining household decisions, particularly with regard to valuing reductions in infertility risks.

Metadata

EPA/NSF ID:
R825308-010
Principal Investigators:
Van Houtven, George
Smith, V. Kerry
Technical Liaison:
Research Organization:
Research Triangle Institute
Duke University
Funding Agency/Program:
EPA/ORD/Valuation
Grant Year:
1996
Project Period:
October 1, 1996 - September 30, 1997
Cost to Funding Agency:
$170,971
Project Status Reports:
      From Proceedings of April 2-3, 1998 Workshop:

      In recent years, there has been growing concern about potential threats from endocrine-disrupting chemi- cals in the environment. These chemicals have the potential to impact human health in various ways, among them increased risks of infertility. This project will develop and evaluate a methodology for applying stated preference techniques to assess the value associ- ated with reducing infertility risks. Previous research in nonmarket valuation of health and environmental risks has focused on individual decisions; however, infertility risks clearly present a context where the household (i.e., the couple) is the relevant decisionmaking unit. This project develops a conceptual framework for linking collective (household) decisions to the preferences of the individual members. It provides a method for demonstrating how measures of economic welfare based on households’ observed or stated decisions relate to the preferences of its individual members.

      The investigators are developing a model of household decisions in which children are treated as a nonrival good within the household, and the household decision is whether to reduce the risks of infertility. In contrast to the more traditional “unitary” models that treat household decisions as if they were made by one individual (i.e., a benevolent preference formulation), this project’s formulation is equivalent to assuming that the household maximizes a weighted sum of the members’ preferences and that the members are not al- truistic. This formulation, or “collective” model, is equivalent to each member maximizing his or her preference function subject to a budget constraint where a sharing function describing the income available to each member exists.


      Observed choices for private and nonrival goods within the household reflect both individual preferences and the income-sharing rule. Information on household consumption, individual choices (from the stated preference survey), and a priori assumptions allow us to distinguish key dimensions of each individual’s preferences along with the income-sharing rule. For the problem of infertility risk, this process, along with our pilot survey results, implies that reliance on a unitary model may lead to misleading conclusions about household willingness to pay for programs to reduce infertility risks.

      To support the development of the conceptual model and to evaluate the use of a stated preference technique for valuing reductions in infertility, the investigators conducted two focus groups with childless couples and, based in part on these groups, designed and implemented a small-scale (200 respondents) pilot survey, which was administered in a computer-assisted format using mall intercept recruiting. Designed for nonsingle but currently childless individuals between the ages of 20 and 35 years, the survey describes how the typical risks of infertility increase with the age of the female partner. It then offers respondents, for a specified price that varies randomly across interviews, a hypothetical medication to reduce their future infertility risks, as shown in Figure 1.


      Initial results suggest that female respondents, in particular, provide answers that support the internal validity of the instrument—the probability of accepting the medication appears to increase with the risk reduction, their individual income, and their perceived risk of experiencing infertility, and to decrease with the size of the payment. Differential effects of their own and their partner’s income on the stated choice also contradict the income-pooling hypothesis that underlies the more tra- ditional unitary models of household decisions. This suggests that a more appropriate model is one that expli- citly accounts for the separate role of individual preferences within household decisions.

      The investigators’ plan is to use the results of this initial survey to revise the instrument and collect additional survey data in a second pilot survey. In the future, our sample will be restricted to female respondents. Also, we will incorporate questions that better address the timing dimension of the decision to purchase the medication.


      Figure 1. Survey’s graphical depiction of an infertility risk reduction scenario (not available).

      From previous status report:

      Objective of Research:

      There is an increasing body evidence suggesting that a broad range of pollutants have the potential to alter human endocrine systems. One potential consequence of exposures to these endocrine disruptors is that they may significantly increase the incidence of infertility in exposed populations. The purpose of this research is to develop and evaluate a methodology for applying stated preference techniques to assess the magnitude of economic values associated with reducing infertility risks from environmental sources. Most previous research in on nonmarket valuation of health and environmental risks has focused on individual decisions; however, infertility risks clearly present a context where the household (i.e. the couple) is the relevant decisionmaking unit. This research is intended to refine a conceptual framework for linking collective (household) decisions to the preferences of the individual members. It will provide a conceptual basis for deriving how measures of economic welfare based on households observed or stated decisions relate to the preferences of the individual adult members living in that household.

      Progress Summary and Accomplishments:

      Review of Household Decision Models. For the most part, the theory underlying revealed preference (and stated preference) methods for non-market valuation assumes that a single economic agent makes choices that can be used to recover preference information. To the extent an individual is assumed to be part of a household he/she is described as the decision-maker for the household and Becker's efficient household framework is implicitly adopted. Observed choices can be interpreted as if the household's decision were governed by a single preference relationship. With increasing prevalence of dual earner households, an extensive literature has developed questioning this view of household decisions. Throughout the course of this project we have collected and reviewed papers that have adapted or departed from the Becker model, in order to inform the development of our own model.

      Literature Review on Environmental Causes of Infertility. Although there has been growing concern about environmental causes of infertility, the evidence of such linkages is somewhat unclear. Using the expertise of epidemiologists at the University of North Carolina, we compiled a detailed literature review of animal and epidemiological studies in this area. The conclusion of this review is that although a number of pollutants are potentially hazardous to fertility, current evidence is inadequate to draw a strong connection between environmental exposures and increased infertility risk.

      Development of Conceptual Model. Based on our literature review of household decision models and the results of our other project activities, we have been developing a model of household decisions, where children are treated as a non-rival good within the household and the household decision is whether to reduce the risks of infertility. Given the existence of a private good offering the opportunity to reduce this collective risk, the structure of the problem allows that good to be treated as a weak complement to the household nonrival good. As a result it should be possible to evaluate models that distinguish individual preferences and to test the competing models' predictions for household choices.

      Focus Groups. We conducted two focus groups with 5-6 couples who did not yet have children to discuss (1) how they make typical household decisions, (2) their expectations with regard to starting a family, (3) their understanding of the sources and magnitude of infertility risks. In the discussion of household decisions, we encouraged them to discuss how they budget for different types of household expenditures and how they resolve differences in opinions about how to spend household time and money. The purpose of these activities was to develop insights into the appropriateness of alternative models of household behavior. We also used these sessions to pretest different versions of a risk communication device and a WTP question for a hypothetical medication to reduce future infertility risks.

      Survey The results of the focus groups suggested that a more appropriate empirical approach for pursuing our research objectives would be to conduct a small scale (250 respondent) pilot survey. This was designed to be administered in a computer assisted format using mall intercept recruiting, and it should be completed in November 1997.

      Future Project Activities

      We will use the results of the survey to support the further development our conceptual model and to test the hypotheses that arise from this model. Analysis of the survey results will also provide preliminary estimates of individuals' willingness to pay to reduce their risks of experiencing infertility. In addition, with the assistance of specialists at Duke University Medical Center we will initiate focus groups with patients that are in the early stages of infertility treatment decisions. In contrast to the earlier focus groups and the survey, which address household decisions to prevent infertility rather than decisions to treat infertility, these focus groups will provide insight into the role of information about treatment on infertility-related household decisions.

      We will present preliminary results of our research at the annual meeting of the American Economics Association in early January 1998, in a presentation entitled "Nonmarket Valuation and the Household: Recovering Individual Preferences with Collective Risk."
Project Reports:
      Final Report:

      Executive Summary

      Description and Objective of Research:

      There is an increasing body evidence suggesting that a broad range of pollutants have the potential to alter human endocrine systems. One potential consequence of exposures to these endocrine disruptors is that they may significantly increase the incidence of infertility in exposed populations. The purpose of this research has been to develop and evaluate a methodology for applying stated preference techniques to assess the magnitude of economic values associated with reducing infertility risks from environmental sources. We have done this through the application of two small-scale pilot contingent valuation surveys.

      This research is also intended to refine a conceptual framework for linking collective (household) decisions to the preferences of the individual members. Most previous research in non-market valuation of health and environmental risks has focused on individual decisions; however, infertility risks clearly present a context where the household (i.e. the couple) is the relevant decisionmaking unit. Our research explores a conceptual basis for deriving how measures of economic welfare based on households' observed or stated decisions relate to the preferences of the individual adult members living in that household.

      Summary of Project Activities and Findings:

      The following is a list and short description of the primary project activities and findings:
      1. Literature Review

      To establish a conceptual and empirical foundation for our work in this project, we began with literature reviews in three primary areas.

      Household Decision Models. We have used this literature to inform the development of a conceptual model that examines how the separate preferences of individuals within a household can be recovered from household decisions.

      Household Labor Supply. To better understand how time allocation decisions are linked to household composition, we conducted a brief review of the recent literature. The evidence from this literature indicates that women's labor supply decisions in particular and the time spent by both partners in nonmarket activities are significantly influenced by household characteristics related to children.

      Environmental Causes of Infertility. The conclusion of this review is that although a number of pollutants are potentially hazardous to fertility, current evidence is inadequate to draw a strong connection between environmental exposures and increased infertility risk. Partly for this reason, we concluded that our initial framing of a CV scenario to assess WTP for a policy intervention designed to reduce infertility risk should not rely on developing the context of environmental exposures.
      2. Development of Conceptual Model
      Based on our literature review of household decision models and our other project activities, we have developed a conceptual framework that links the collective model of household behavior to the methods that are commonly used to estimate the economic value of non-marketed environmental resources.
      3. Sessions with First-time Infertility Patients
      To better understand the decisions and complications experienced by couples who are having difficulty conceiving a child, we attended sessions with first time patients as they discussed their reasons for seeking assistance and were confronted with alternatives for how to address their problems.
      4. Focus Groups
      We conducted a focus group with couples who did not yet have children to discuss (1) how they make typical household decisions, (2) their expectations with regard to starting a family, (3) their understanding of the sources and magnitude of infertility risks, and (4) different versions of a risk communication device and a WTP question for a hypothetical medication to reduce future infertility risks.
      5. First Pilot Survey
      The survey was initially implemented at a malls in Charlotte, NC; Seattle, WA; and Jacksonville, FL. We collected information from 209 respondents - 114 in Charlotte, 48 in Seattle, and 49 in Jacksonville. The sample was almost 40 percent female, with an average age of about 24 years, and an annual household income of roughly $40,000. When the male and female samples were analyzed separately, it was found that the internal validity of the female sample responses (based on the sign and significance of the price, income, and risk reduction variables) was much stronger. The results of this analysis were used to revise the survey instrument and collect a second round of data through a second pilot survey, which is described below.
      6. Second Pilot Survey
      Based on the results of the first pilot, we determined that the survey instrument needed to be revised in three ways in particular. First, we decided to focus exclusively on female respondents. Second, we needed to better account for the timing of the medication decision. Third, we needed to include more detailed information regarding the earnings and labor force participation of the two partners. The revised survey was implemented during the summer months of 1998 at four mall locations across the US - Tampa, FL; Tulsa, OK; Las Vegas, NV; and Freehold, NJ. The total sample of useable responses came to 188 women (72, 50, 38, and 28 at the respective locations) between the ages of 20 and 35 (with an average of about 25 years old). Based on the results of the probit analysis, the mean WTP for the medication was about $320 per year. The medication was described to delay the upward trend in infertility risk that a couple typically experiences (by up to five years). Depending on how long one takes the medication, this translates to reductions in the probability of infertility in any given year by about 1 to 10 percent. Under alternative assumptions regarding the discount rate and the length of time one takes the medication, this implies a total WTP for a "statistical" child of between $15,000 and $60,000. These estimates are very preliminary, but they do provide a point of comparison with other comparable empirical estimates

      Conclusions:

      This research has extended the collective model of household decisionmaking (Chiappori, 1988; Browning et al., 1994) to demonstrate its relevance for measuring consumer surplus. To our knowledge it is the first time this collective approach has been used to generalize Hausman's (1981) approach for recovering Hicksian consumer surplus. In addition, the conceptual research demonstrated how a household production framework, public goods (internal and external to the household) and risk could be incorporated into the model. For each of these cases, the analysis highlights how the concept of an "income sharing rule," which is central to the collective model, can be used to distinguish household members' preferences.

      The research also demonstrated that it is possible to elicit consumer preferences for reducing infertility risks. The two pilot surveys demonstrated that women are the most likely population to be sampled. An initial pilot with both men and women indicated that men seemed to have greater difficulty with the risk reduction scenario discussed in the instrument. However, in both pilots, female respondents provided answers to the WTP question that were, for the most part, consistent with economic theory and, thus, supported the internal validity of the instrument. Using the all-female sample and a number of simplifying assumptions, we are able to derive some preliminary WTP estimates for reductions in infertility risk. The ability to generalize these results to a broader population is greatly restricted by the size and non-random nature of the sample. However, we do estimate values for a "statistical child" that are considerably lower than those estimated by the most directly comparable study.

      Findings from the focus groups and pilot surveys were also generally consistent with a "unitary" model of household infertility-related decisions. Under such a framework, household expenditure decisions are treated as if they were the result maximizing a single utility function subject to a single "pooled" budget constraints. Alternative models take into account the divergence of preferences within a household and the possibility that income is not entirely pooled. Our findings indicate a general convergence of preferences between partners regarding childbearing issues, which is consistent with an "assortative mating" view of partnering (e.g., marriage) and a single common preference structure. Furthermore, our analysis of the survey data found little evidence to contradict the income pooling hypothesis for infertility-related decisions. Nevertheless, we cannot firmly reject the collective view of the household, particularly for other types of household decisions. Under ideal circumstances, information would be collected from a larger sample, on a broader range of issues and from both partners in a household in order to more thoroughly evaluate which factors influence whether a collective view of the household matters.

      Publications/Presentations:

      Van Houtven, George. "Willingness to Pay for Reductions in Infertility Risks: A Contingent Valuation Study." Presented at the 1999 EPA Workshop entitled Valuing Health for Environmental Policy With Special Emphasis on Children's Health Issues, Silver Spring, MD, March 25, 1999.

      Van Houtven, George. "Valuing Reductions in Infertility Risks: Individual Preferences and Household Decisions." Presented at the 1998 Decision-Making and Valuation for Environmental Policy Workshop, Washington, DC, April 3, 1998.

      Smith, V. Kerry. "Non-Market Valuation and the Household: Individual Preferences and Collective Risks of Infertility." Presented at the Harvard University Center for Risk Analysis, March 1998.

      Smith, V. Kerry and George Van Houtven. 1998. "Non-Market Valuation and the Household" Revise-and-Resubmit to the Journal of Environmental Economics and Management.

      Smith, V. Kerry and George Van Houtven. "Non-Market Valuation and the Household: Recovering Individual Preferences with Collective Risk." Presented at the 1998 Meetings of the American Economic Association, Chicago, IL, January 3, 1998.


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